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INCOME TAXES
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income tax expense was $53 million and $196 million for the three and nine months ended September 30, 2022, compared to income tax expense of $100 million and $353 million in the same period of 2021. For the three and nine months ended September 30, 2022, the changes in the effective tax rate from the prior period include overall lower level of earnings, impact of non deductible goodwill impairments, audits and settlements, prior year divestiture, and legal entity restructuring tax impacts.
The following table summarizes the difference between income tax expense (benefit) at the U.S. statutory rate of 21% and the income tax expense (benefit) at effective worldwide tax rates for the respective periods:
Three Months Ended September 30, Nine Months Ended September 30,
Millions of dollars2022202120222021
Earnings (Loss) before income taxes$200 $586 $295 $1,859 
Income tax expense (benefit) computed at United States statutory tax rate42 123 62 390 
State and local taxes, net of federal tax benefit(2)17 14 49 
Valuation allowances12 3 19 5 
Audit and Settlements6 (32)(13)(17)
U.S. foreign income items, net of credits2 (1)(8)(1)
Changes in enacted tax rates— — — (14)
Non deductible impairments— — 150 — 
Divestiture tax impact— (1)— (22)
Legal entity restructuring tax impact— — — (46)
Other(7)(9)(28)9 
Income tax expense (benefit) computed at effective worldwide tax rates$53 $100 $196 $353 
At the end of each interim period, we estimate the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjust the quarterly rate as necessary.
Other Income Tax Matters
During its examination of Whirlpool’s 2009 U.S. federal income tax return, the IRS asserted that income earned by a Luxembourg subsidiary via its Mexican branch should be recognized as income on its 2009 U.S. federal income tax return. The Company believed the proposed assessment was without merit and contested the matter in United States Tax Court (US Tax Court). Both Whirlpool and the IRS moved for partial summary judgment on this issue. On May 5, 2020, the US Tax Court granted the IRS’s motion for partial summary judgment and denied Whirlpool’s.
The Company appealed the US Tax Court decision to the United States Court of Appeals for the Sixth Circuit, and, on December 6, 2021, the three-judge panel, in a divided decision, affirmed the U.S. Tax Court decision (the "Ruling"). The Company recorded a reserve of $98 million in the fourth quarter of 2021, which represents the expected increase in the Company’s net income tax expense, plus interest, for 2009 through 2019, which represents all of the Company’s tax years that were affected by the Ruling. On January 20, 2022, the Company filed a petition for rehearing with the Sixth Circuit, which was denied on March 2, 2022. On June 30, 2022, the Company filed a petition for certiorari with the U.S. Supreme Court. The government has provided its response and the Company will have the opportunity to respond in kind.