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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Schedule Of Effective Income Tax Rate Reconciliation

Presented in the following table is the difference between actual income tax expense on continuing operations and income tax expense computed by applying the statutory U.S. federal income tax rate:



In Millions, Except Tax Rate
Years Ended December 31	2019				2018				2017
CMS Energy, including Consumers
Income from continuing operations before income taxes		$	829			$	774			$	886
Income tax expense at statutory rate		174				163				310
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect¹		48				46				26
TCJA excess deferred taxes²		(31		)		(26		)		—
Production tax credits		(20		)		(14		)		(8		)
Accelerated flow-through of regulatory tax benefits³		(13		)		(39		)		(39		)
Research and development tax credits, net⁴		(2		)		(11		)		(1		)
Impact of the TCJA⁵		—				(4		)		148
Other, net		(9		)		—				(12		)
Income tax expense		$	147			$	115			$	424
Effective tax rate		17.7		%		14.9		%		47.9		%
Consumers
Income from continuing operations before income taxes		$	928			$	847			$	971
Income tax expense at statutory rate		195				178				340
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect¹		53				51				30
TCJA excess deferred taxes²		(31		)		(26		)		—
Accelerated flow-through of regulatory tax benefits³		(13		)		(39		)		(39		)
Production tax credits		(12		)		(12		)		(8		)
Research and development tax credits, net⁴		(2		)		(11		)		(1		)
Impact of the TCJA⁵		—				1				33
Other, net		(5		)		—				(16		)
Income tax expense		$	185			$	142			$	339
Effective tax rate		19.9		%		16.8		%		34.9		%

In 2017, CMS Energy completed the evaluation of its methodology for the state apportionment of Consumers’ electricity sales to MISO, taking into account recent state tax law developments in the electric utility sector. To recognize the anticipated refund and the impact of the expected lower effective tax rate on their deferred state tax liabilities, CMS Energy, including Consumers, recorded a $14 million income tax benefit in 2017. These tax benefits were net of reserves for uncertain tax positions and primarily

attributable to Consumers. In 2018, CMS Energy amended its 2013 Michigan Corporate Income Tax return and submitted a refund claim for taxes previously paid. The refund claim was denied by the State of Michigan. In 2019, CMS Energy received an unfavorable informal conference decision and filed a petition with the Michigan Tax Tribunal. A trial is anticipated in 2020. CMS Energy’s uncertain tax position on this matter remains unchanged.


²	In December 2017, Consumers remeasured its deferred tax assets and liabilities at the new federal tax rate enacted by the TCJA and recorded a net $1.6 billion regulatory liability. As a result of an order received in September 2019, Consumers began refunding these excess deferred taxes to customers. For additional details on the order received, see Note 3, Regulatory Matters.


³	In 2013, the MPSC issued an order authorizing Consumers to accelerate the flow-through to electric and gas customers of certain income tax benefits associated primarily with the cost of removal of plant placed in service before 1993. Consumers implemented this regulatory treatment beginning in 2014, with the electric portion ending in 2018 and the gas portion continuing through 2025.


⁴	In March 2018, Consumers finalized a study of research and development tax credits for the tax years 2012 through 2016. As a result, Consumers recognized an $8 million increase in the credit, net of reserves for uncertain tax positions, at that time.


⁵	In December 2017, CMS Energy and Consumers recorded a reasonable estimate to measure and account for the impact of the TCJA. In December 2018, CMS Energy recorded a true-up of their estimate and eliminated the $9 million valuation allowance on the sequestration of alternative minimum tax credits.

Significant Components Of Income Tax Expense

Presented in the following table are the significant components of income tax expense on continuing operations:



In Millions
Years Ended December 31	2019				2018				2017
CMS Energy, including Consumers
Current income taxes
Federal		$	(31	)		$	(67	)		$	—
State and local		28				—				6
		$	(3	)		$	(67	)		$	6
Deferred income taxes
Federal		$	97			$	112			$	368
State and local		32				58				36
		$	129			$	170			$	404
Deferred income tax credit		21				12				14
Tax expense		$	147			$	115			$	424
Consumers
Current income taxes
Federal		$	107			$	6			$	159
State and local		41				13				17
		$	148			$	19			$	176
Deferred income taxes
Federal		$	(10	)		$	60			$	120
State and local		26				51				29
		$	16			$	111			$	149
Deferred income tax credit		21				12				14
Tax expense		$	185			$	142			$	339

Principal Components Of Deferred Income Tax Assets And Liailities

Presented in the following table are the principal components of deferred income tax assets (liabilities) recognized:



In Millions
December 31	2019				2018
CMS Energy, including Consumers
Deferred income tax assets
Tax loss and credit carryforwards		$	239			$	385
Net regulatory tax liability		385				395
Reserves and accruals		43				39
Total deferred income tax assets		$	667			$	819
Valuation allowance		(2		)		(8		)
Total deferred income tax assets, net of valuation allowance		$	665			$	811
Deferred income tax liabilities
Plant, property, and equipment		$	(2,033	)		$	(1,955	)
Employee benefits		(172		)		(165		)
Securitized costs		(59		)		(65		)
Gas inventory		(32		)		(35		)
Other		(24		)		(78		)
Total deferred income tax liabilities		$	(2,320	)		$	(2,298	)
Total net deferred income tax liabilities		$	(1,655	)		$	(1,487	)
Consumers
Deferred income tax assets
Net regulatory tax liability		$	385			$	395
Tax loss and credit carryforwards		20				64
Reserves and accruals		24				21
Total deferred income tax assets		$	429			$	480
Deferred income tax liabilities
Plant, property, and equipment		$	(1,995	)		$	(1,943	)
Employee benefits		(178		)		(172		)
Securitized costs		(59		)		(65		)
Gas inventory		(32		)		(35		)
Other		(29		)		(74		)
Total deferred income tax liabilities		$	(2,293	)		$	(2,289	)
Total net deferred income tax liabilities		$	(1,864	)		$	(1,809	)

Loss And Credit Carryforwards

Presented in the following table are the tax loss and credit carryforwards at December 31, 2019:



In Millions
	Gross Amount			Tax Attribute			Expiration
CMS Energy, including Consumers
Local net operating loss carryforwards		$	389		$	4	2023 – 2036
General business credits		206			206		2026 – 2039
Alternative minimum tax credits		29			29		Not applicable
Total tax attributes					$	239
Consumers
General business credits		$	20		$	20	2027 – 2039
Total tax attributes					$	20

Reconciliation Of Beginning And Ending Uncertain Tax Benefits

Presented in the following table is a reconciliation of the beginning and ending amount of uncertain tax benefits:



In Millions
Years Ended December 31	2019			2018			2017
CMS Energy, including Consumers
Balance at beginning of period		$	19		$	14		$	5
Additions for current-year tax positions		1			1			10
Additions for prior-year tax positions		3			4			—
Reductions for prior-year tax positions		—			—			(1		)
Balance at end of period		$	23		$	19		$	14
Consumers
Balance at beginning of period		$	28		$	21		$	5
Additions for current-year tax positions		1			2			17
Additions for prior-year tax positions		5			5			—
Reductions for prior-year tax positions		—			—			(1		)
Balance at end of period		$	34		$	28		$	21

Consumers Energy Company

Income Taxes [Line Items]