
	Year Ended December 31,
(In thousands)	2020		2019		2018
Domestic	$	212,859	$	212,406	$	11,290
Foreign	9,920		11,377		2,551
Earnings before income taxes	$	222,779	$	223,783	$	13,841


	Year Ended December 31,
	2020		2019		2018
Tax at statutory rate	21.0	%	21.0	%	21.0	%

State income taxes	2.8	%	4.3	%	17.6	%
Effect of foreign operations	(0.3)	%	0.3	%	(1.2)	%
Effect of current and prior year credits	(0.8)	%	(2.7)	%	(31.4)	%
Change in unrecognized tax benefits	0.3	%	—	%	10.9	%
Other permanent differences	(0.7)	%	0.2	%	14.9	%
Prior year return to provision adjustments	1.1	%	(2.7)	%	7.3	%

Benefit of CARES Act	(7.5)	%	—	%	—	%
Valuation allowance	(9.3)	%	1.2	%	(0.5)	%
Other, net	—	%	0.8	%	—	%
Effective income tax rate	6.6	%	22.4	%	38.6	%


	Year Ended December 31,
(In thousands)	2020		2019		2018
Current expense (benefit)
Federal	$	14,354	$	(6,996)	$	(2,573)
State	4,735		528		816
Foreign	1,608		796		724
Total current	20,697		(5,672)		(1,033)
Deferred expense (benefit)
Federal	12,576		37,309		4,691
State	(2,956)		16,439		3,325
Foreign	(15,653)		2,161		(1,634)
Total deferred	(6,033)		55,909		6,382
Total income tax expense (benefit)	$	14,664	$	50,237	$	5,349


	December 31,
(In thousands)	2020		2019
Deferred tax assets

Net operating loss carryforwards	$	32,834	$	34,928

Accrued liabilities	45,776		45,671
Intangible assets	9,676		13,088

Lease obligations	67,999		71,104
Other assets including credits	10,079		10,915
Foreign tax credit carryforwards	5,643		7,815
Total deferred tax assets	172,007		183,521
Valuation allowance	(21,645)		(43,555)
Deferred tax assets, net	150,362		139,966
Deferred tax liabilities
Rental merchandise	(206,833)		(193,878)
Property assets	(18,935)		(24,513)
Lease assets	(66,661)		(69,035)
Other liabilities	(561)		(1,635)
Total deferred tax liabilities	(292,990)		(289,061)
Net deferred taxes	$	(142,628)	$	(149,095)

At December 31, 2020, we had net operating loss carryforwards of approximately $293 million for state and $58 million for foreign jurisdictions, partially offset by valuation allowance. We also had federal, state and foreign tax credit carryforwards of approximately $12.8 million of which a portion has been offset by a valuation allowance. The net operating losses and credits will expire in various years between 2021 and 2040.

We file income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, we are subject to examination by various taxing authorities. We are currently under examination by certain Federal and state revenue authorities for the fiscal years 2011 through 2018. The following is a summary of all tax years that are open to examination.

We do not anticipate that adjustments as a result of these audits, if any, will have a material impact to our consolidated statement of operations, consolidated balance sheets, and statement of cash flows or earnings per share.

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. As a result, in 2020, we decreased the valuation allowance against net operating losses and credits in multiple state jurisdictions. After review of the positive evidence generated during the year related to our foreign operations in Mexico, management now believes that a portion of the deferred tax assets will more likely than not be utilized. As a result, $12.2 million has been removed from the valuation allowance related to foreign deferred tax assets in Mexico.


	Year Ended December 31,
(In thousands)	2020		2019		2018
Beginning unrecognized tax benefit balance	$	24,208	$	36,364	$	37,319
Additions (Reductions) based on tax positions related to current year	1,204		(654)		(206)
Additions for tax positions of prior years	45		415		735
Reductions for tax positions of prior years	(2,086)		(11,917)		(488)
Settlements	(1,187)		—		(996)
Ending unrecognized tax benefit balance	$	22,184	$	24,208	$	36,364

Included in the balance of unrecognized tax benefits at December 31, 2020, is $2.7 million, net of federal benefit, which, if ultimately recognized, will affect our annual effective tax rate.

As of December 31, 2020, we have accrued approximately $2.7 million for the payment of interest for uncertain tax positions and recorded interest expense of approximately $0.4 million for the year then ended, which are excluded from the reconciliation of unrecognized tax benefits presented above. These amounts are net of the reversal of interest expense due to settlement of certain tax positions and closing of tax years.

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act, (the "CARES Act"). The CARES Act included several tax relief options for companies, including a five-year net operating loss carryback. Rent-A-Center elected to carryback its 2018 net operating losses of $119.5 million to offset the Company’s 2013 taxable income, thus generating a refund of $41.8 million and an income tax benefit of $16.7 million. The tax benefit is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2013.

The effect of the tax rate change for items originally recognized in other comprehensive income was properly recorded in tax expense from continuing operations. This results in stranded tax effects in accumulated other comprehensive income at December 31, 2020. Companies can make a policy election to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects directly arising from the change in the federal corporate tax rate. We did not exercise the option to reclassify stranded tax effects within accumulated other comprehensive income in each period in which the effect of the change in the U.S. federal corporate income tax rate resulting from the Tax Cuts and Jobs Act of 2017 was recorded.