Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Uncertain Tax Positions

As of June 30, 2022, the Company had approximately $123 million of unrecognized tax benefits recorded in Other liabilities and no amounts recorded to Other current liabilities. If these unrecognized tax benefits were recognized, the effective tax rate would be affected.

As of June 30, 2022, the Company had accrued interest and penalties of approximately $38 million classified in Other liabilities and no amounts classified in Other current liabilities.

As of June 30, 2022, the Company’s aggregate provisions for uncertain tax positions, including interest and penalties, was approximately $161 million associated with tax positions asserted in various jurisdictions.

The Company regularly repatriates earnings from non-U.S. subsidiaries. As the Company repatriates these funds to the U.S., they will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of June 30, 2022, the Company had a deferred tax liability of approximately $92 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where we intend to indefinitely reinvest the earnings to fund local operations and/or capital projects.

The Company has ongoing income tax audits and legal proceedings which are at various stages of administrative or judicial review. In addition, the Company has open tax years with various taxing jurisdictions that range primarily from 2012 to 2021. Based on currently available information, the Company does not believe the outcome of any of these tax audits and other tax positions related to open tax years, when finalized, will have a material impact on its results of operations.

The Company also has other ongoing tax audits and legal proceedings that relate to indirect taxes, such as value-added taxes, sales and use taxes and property taxes, which are discussed in Note 15.

Effective Tax Rate

The effective tax rate for the three months ended June 30, 2022 was 16.2% compared to 31.8% for the three months ended June 30, 2021. The quarter-over-quarter decrease was primarily due to the release of uncertain tax positions in connection to an audit settlement, a favorable mix of earnings and the impact of a one-time non-cash United Kingdom rate change from the prior year period.

The effective tax rate for the six months ended June 30, 2022 was 14.5% compared to 0% for the six months ended June 30, 2021. The year-over-year increase was primarily due to the release of uncertain tax positions in connection to an audit settlement, changes in the mix of earnings and a one-time benefit to record a receivable associated with the proceedings of a bi-lateral advance pricing agreement, partially offset by the impact of a one-time non-cash United Kingdom rate change from the prior year period.