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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
In 2021, 2020 and 2019, we recorded tax provisions of $225.0 million, $142.1 million and $76.6 million, respectively. Cash tax payments, net of refunds were $112.6 million, $102.0 million and $94.7 million for 2021, 2020 and 2019, respectively.
Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”) provides for a territorial tax system, and includes the global intangible low-taxed income (“GILTI”) provision. The Company has elected to account for GILTI tax in the period in which it is incurred.
Subject to certain exceptions, the GILTI provisions require the Company to include in its U.S. income tax return the earnings of a foreign subsidiary which are in excess of an allowable return on the foreign subsidiary’s tangible assets.
In the fourth quarter of 2019, as part of our Reinvent SEE business transformation and in order to align our structure with our evolving global operations, we transferred certain intangible assets between wholly-owned subsidiaries. The transfer resulted in the establishment of a deferred tax asset and the corresponding recognition of deferred tax benefit of $49 million.
Coronavirus Aid, Relief and Economic Security Act and Issuance of 2020 Tax Regulations
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. Among other things, the CARES Act raises certain deduction limitations originally imposed by the 2017 Tax Act.
Taxpayers may generally deduct interest expense up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2020 and 2019. We had no Federal disallowed interest expense in 2020 and 2019. The limit reverted to 30% of adjusted taxable income in 2021, however the reduced limit did not result in a disallowance in 2021.
In July 2020, the U.S. Department of Treasury issued final tax regulations with respect to the GILTI proposed tax regulations originally published in 2019. Among other changes, these regulations now permit an election to exclude from the GILTI calculation items of income which are subject to a high effective rate of foreign tax. We adopted these final regulations and recorded the net benefit in 2020.
The components of earnings before income tax provision were as follows:
 Year Ended December 31,
(In millions)202120202019
Domestic$346.2 $328.2 $126.7 
Foreign370.0 298.0 243.6 
Total$716.2 $626.2 $370.3 
 
The components of our income tax provision were as follows:
 Year Ended December 31,
(In millions)202120202019
Current tax expense:   
Federal$63.1 $(14.2)$62.3 
State and local17.2 5.6 4.6 
Foreign106.6 69.9 64.1 
Total current expense$186.9 $61.3 $131.0 
Deferred tax expense (benefit):   
Federal$9.6 $59.4 $(19.0)
State and local6.9 11.8 4.0 
Foreign21.6 9.6 (39.4)
Total deferred tax expense (benefit)38.1 80.8 (54.4)
Total income tax provision$225.0 $142.1 $76.6 
Deferred tax assets (liabilities) consist of the following:
 December 31,
(In millions)20212020
Accruals not yet deductible for tax purposes$17.1 $16.0 
Net operating loss carryforwards219.4 252.1 
Foreign, federal and state credits6.4 6.5 
Employee benefit items45.4 78.7 
Capitalized expenses3.9 6.2 
Intangibles 15.4 24.9 
Derivatives and other45.4 59.8 
Sub-total deferred tax assets353.0 444.2 
Valuation allowance(189.6)(207.1)
Total deferred tax assets$163.4 $237.1 
Depreciation and amortization$(78.6)$(66.0)
Unremitted foreign earnings— (11.0)
Intangible assets— — 
Other(0.2)(4.0)
Total deferred tax liabilities(78.8)(81.0)
Net deferred tax assets$84.6 $156.1 
Valuation allowances have been provided based on the uncertainty of realizing the tax benefits of certain deferred tax assets, primarily:
•$179.6 million of foreign items, primarily net operating losses; and
•$6.2 million of tax credits.
For the year ended December 31, 2021, the valuation allowances decreased by $17.5 million. The change is primarily driven by foreign exchange revaluation on foreign net operating losses, offset by a net increase attributable to certain APAC entities.
As of December 31, 2021, we have foreign net operating loss carryforwards of $830.3 million expiring in years beginning in 2022, with the large majority of losses having an unlimited carryover. The state net operating loss carryforwards totaling $368.4 million expire in various amounts over 1 to 19 years.
As of December 31, 2021, we have $1.7 million of federal tax credit carryforwards and $5.9 million of state credit carryovers expiring in 2022 – 2028. Most of the credit carryovers have a valuation allowance.
The Company has indefinitely reinvested most of its foreign earnings, which are the principal component of U.S. and foreign outside basis differences. The total amount of unremitted foreign earnings is approximately $5.0 billion upon which the U.S. federal income tax effect has largely been recorded as a result of the one-time mandatory tax on previously deferred foreign earnings of foreign subsidiaries provision (“Transition Tax”) associated with the 2017 Tax Act. Remitting these foreign earnings would result in additional foreign and U.S. income tax consequences, the net tax costs of which are not practicable to determine. As SEE has evaluated its worldwide business under the Reinvent SEE business transformation, the Company has reorganized and simplified its structure in order to align its business operations and optimize cash balances in certain jurisdictions. While the Company continues to evaluate potential future cash repatriations and optimization strategies, no deferred tax liability for future distributions has been recorded as of December 31, 2021.
We have no outstanding liability with respect to Transition Tax.
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate, 21%, to income before provision for income taxes, is as follows:
 Year Ended December 31,
(In millions)202120202019
Computed expected tax$150.4 21.0 %$131.5 21.0 %$77.8 21.0 %
State income taxes, net of federal tax benefit
15.6 2.2 %13.4 2.1 %6.2 1.7 %
Foreign earnings taxed at different rates
16.2 2.2 %10.5 1.7 %10.5 2.8 %
U.S. tax on foreign earnings14.3 2.0 %24.0 3.8 %29.0 7.8 %
Tax credits(30.2)(4.2)%(27.8)(4.4)%(50.1)(13.5)%
Unremitted foreign earnings— — %2.5 0.4 %10.0 2.7 %
Reorganization and divestitures— — %0.4 0.1 %(47.2)(12.7)%
Withholding tax4.7 0.7 %4.2 0.7 %4.8 1.3 %
Net change in valuation allowance3.6 0.5 %(5.2)(0.8)%(7.6)(2.1)%
Net change in unrecognized tax benefits19.6 2.7 %(1.1)(0.2)%36.5 9.9 %
Legislative Changes5.1 0.7 %(22.4)(3.6)%— — %
Deferred tax adjustments11.4 1.6 %3.0 0.5 %0.9 0.2 %
Other 14.3 2.0 %9.1 1.4 %5.8 1.6 %
Income tax provision and rate$225.0 31.4 %$142.1 22.7 %$76.6 20.7 %
Unrecognized Tax Benefits
We are providing the following disclosures related to our unrecognized tax benefits and the effect on our effective income tax rate if recognized:
Year Ended December 31,
(In millions)202120202019
Beginning balance of unrecognized tax benefits$379.6 $390.3 $356.4 
Additions for tax positions of current year1.8 2.7 3.4 
Additions for tax positions of prior years9.7 8.3 47.9 
Reductions for tax positions of prior years(1.9)(18.2)(16.0)
Reductions for lapses of statutes of limitation and settlements(0.2)(3.5)(1.4)
Ending balance of unrecognized tax benefits$389.0 $379.6 $390.3 

In 2021, our unrecognized tax benefit increased by $9.4 million, primarily related to interest or other adjustments to existing unrecognized tax benefit positions. In 2020, our unrecognized tax benefit decreased by $10.7 million, primarily related to the resolution of audit matters.
If the unrecognized tax benefits at December 31, 2021 were recognized, our income tax provision would decrease by $342.2 million, resulting in a substantially lower effective tax rate. Based on the potential outcome of the Company’s global tax examinations and the expiration of the statute of limitations for specific jurisdictions, it is possible that the unrecognized tax
benefits could change significantly within the next 12 months. Absent resolution of significant tax controversy, the associated impact on the reserve balance is estimated to be a decrease of approximately $5.0 million during 2022.
We recognize interest and penalties associated with unrecognized tax benefits in our income tax provision in the Consolidated Statements of Operations. Interest and penalties recorded were $10.5 million, $5.6 million, and $13.1 million, respectively in 2021, 2020 and 2019. We had gross liabilities, for interest and penalties, of $80.0 million at December 31, 2021, $65.3 million at December 31, 2020 and $56.2 million at December 31, 2019. 
Most of the unrecognized tax benefit amount of $389.0 million relates to the Americas.
Income Tax Returns
The IRS completed its field examination of the U.S. federal income tax returns for the years 2011-2014 in the third quarter of 2020. As previously disclosed, the IRS has proposed to disallow, for the 2014 taxable year, the entirety of the deduction of the approximately $1.49 billion settlement payment made pursuant to the Settlement agreement (as defined in Note 20, “Commitments and Contingencies”) and the resulting reduction of our U.S. federal tax liability by approximately $525 million. We continue to believe that we have meritorious defenses to the proposed disallowance and have filed a protest with the IRS. The matter has been submitted to the IRS Independent Office of Appeals for review of the proposed disallowance, and we cannot predict when the Appeals Process will conclude, or the outcome of such process. It is possible that future developments in this matter could have a material impact on the Company's uncertain tax position balances and results of operations, including cash flows, within the next twelve months.
State income tax returns are generally subject to examination for a period of 3 to 5 years after their filing date. We have various state income tax returns in the process of examination and are generally open to examination for periods after 2015.
Our foreign income tax returns are under examination in various jurisdictions in which we conduct business. Income tax returns in foreign jurisdictions have statutes of limitations generally ranging from 3 to 5 years after their filing date. We have various foreign returns in the process of examination but have largely concluded all other income tax matters for the years prior to 2015.
Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any of the issues addressed in the Company’s tax audits are resolved in a manner that is inconsistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs and could be required to make significant payments as a result.