We file a consolidated U.S. federal income tax return and income tax returns in various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions. Our principal foreign jurisdictions include the United Kingdom, France and Germany. The Internal Revenue Service has completed its examination of our U.S. federal tax returns through 2015. Tax returns in the United Kingdom, France and Germany have been examined through 2016, 2015 and 2009, respectively.

On December 22, 2017, the Tax Cuts and Jobs Act, or Tax Act, was enacted into law, which significantly changed U.S. corporate tax law by, among other things, lowering the U.S. federal statutory income tax rate to 21% from 35% for tax years beginning January 1, 2018, implementing a territorial tax system, and imposing a one-time transition tax on the deemed repatriation of accumulated earnings of foreign subsidiaries. The changes required that we record the transition tax expense on the accumulated earnings of our foreign subsidiaries and remeasure our previously reported deferred tax positions to reflect the impact of the revised statutory U.S. federal rate.

At December 31, 2017, we estimated the effect of the Tax Act and recorded a net increase to income tax expense of $106.3 million. The provisional amount included an increase in income tax expense of $192.1 million for the transition tax and a reduction in income tax expense for the remeasurement of our deferred tax assets and liabilities of $173.3 million. At December 31, 2017, after taking into consideration available foreign tax credits and other items, we recorded a net liability of $102.9 million for the transition tax.

The territorial tax system allows us to repatriate earnings of our foreign subsidiaries without incurring additional U.S. tax by providing a 100% dividend exemption. While the change to a territorial tax system limits U.S. federal income tax to domestic source income, foreign source income is subject to tax in the appropriate foreign jurisdiction at the local rate, which in certain jurisdictions may be higher than the U.S. federal statutory income tax rate of 21%. As a result, the foreign tax rate differential will cause our effective tax rate to be higher than the U.S. federal statutory income tax rate. In 2017, we recorded a charge of $87.5 million related to the withholding taxes.

In 2018, we recorded additional income tax expense of $28.9 million reflecting the finalization of the provisional estimate of the effect of the Tax Act recorded in 2017. At December 31, 2019 and 2018, the liability for the transition tax was $123.6 million and $139.1 million, respectively.

We have elected to account for any tax on the global intangible low-taxed income, or GILTI, in the period in which it is incurred. In 2019 and 2018, we provided $14.7 million and $12.9 million, respectively, for tax impacts of GILTI.


	Year Ended December 31,
	2019		2018		2017
Domestic	$	913.1	$	643.7	$	832.4
International	1,025.2		1,280.6		1,052.5
	$	1,938.3	$	1,924.3	$	1,884.9


	Year Ended December 31,
	2019		2018		2017
Current:
U.S. federal	$	180.2	$	273.8	$	458.8
U.S. state and local	33.9		35.5		36.5
International	306.9		305.2		280.2
	521.0		614.5		775.5
Deferred:
U.S. federal	19.1		(104.2)		(205.5)
U.S. state and local	(22.5)		2.8		11.1
International	(13.2)		(20.4)		115.1
	(16.6)		(121.8)		(79.3)
	$	504.4	$	492.7	$	696.2


	2019		2018		2017
Statutory U.S. federal income tax rate	21.0	%	21.0	%	35.0	%
U.S. state and local income taxes, net of U.S. federal income tax benefit	0.5		1.6		1.3
Effect of Tax Act	—		1.5		5.6
International tax rate differentials	4.5		3.8		(3.8)
Other	—		(2.3)		(1.2)
Effective tax rate	26.0	%	25.6	%	36.9	%

The effective tax rate for 2019 includes a reduction of $10.8 million primarily from the net favorable settlement of uncertain tax positions in various jurisdictions in the second quarter of 2019. The international tax rate differentials in 2019 and 2018 are primarily attributed to our earnings in Germany, Canada, France, Japan and Brazil being taxed at higher rates than the U.S. statutory tax rate.

Income tax expense in 2019, 2018 and 2017 includes $2.2 million, $3.6 million and $2.5 million, respectively, of interest, net of tax benefit, and penalties related to tax positions taken on our tax returns. At December 31, 2019 and 2018, accrued interest and penalties were $20.0 million and $21.1 million, respectively.


	December 31,
	2019		2018
Deferred tax assets:
Compensation	$	210.9	$	209.7
Tax loss and credit carryforwards	60.6		38.1
Basis differences from acquisitions	22.9		13.9
Basis differences from short-term assets and liabilities	42.2		35.7
Other	4.6		10.8
Deferred tax assets	341.2		308.2
Valuation allowance	(7.6)		(3.0)
Net deferred tax assets	$	333.6	$	305.2
Deferred tax liabilities:
Goodwill and intangible assets	$	598.0	$	577.5
Unremitted foreign earnings	69.0		69.2
Basis differences from investments	9.0		9.6
Financial instruments	0.9		0.8
Deferred tax liabilities	$	676.9	$	657.1

Long-term deferred tax assets	$	64.8	$	61.8
Long-term deferred tax liabilities	$	408.1	$	413.7

We have concluded that it is more likely than not that we will be able to realize our net deferred tax assets in future periods because results of future operations are expected to generate sufficient taxable income. The valuation allowance of $7.6 million and $3.0 million at December 31, 2019 and 2018, respectively, relates to tax losses in international jurisdictions. Tax loss and credit carryforwards for which there is no valuation allowance are available for periods ranging from 2020 to 2039, which is longer than the forecasted utilization of such carryforwards.


	December 31,
	2019		2018
January 1	$	182.8	$	173.7
Additions:
Current year tax positions	12.3		30.1
Prior year tax positions	29.4		5.2
Reduction of prior year tax positions	(13.1)		(25.4)
Settlements	(5.0)		—

Foreign currency translation	0.4		(0.8)
December 31	$	206.8	$	182.8

The majority of the liability for uncertain tax positions is recorded in long-term liabilities. At December 31, 2019 and 2018, approximately $179.0 million and $174.0 million, respectively, of the liability for uncertain tax positions would affect our effective tax rate upon resolution of the uncertain tax positions.