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Income Taxes (Note)
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes NOTE 13 INCOME TAXES
The components of International Paper’s earnings from continuing operations before income taxes and equity earnings by taxing jurisdiction were as follows:
 
In millions202320222021
Earnings (loss)
U.S.$129 $1,469 $906 
Non-U.S.253 42 93 
Earnings (loss) from continuing operations before income taxes and equity earnings (losses)$382 $1,511 $999 
The provision (benefit) for income taxes from continuing operations (excluding noncontrolling interests) by taxing jurisdiction was as follows:
In millions202320222021
Current tax provision (benefit)
U.S. federal$157 $454 $413 
U.S. state and local16 56 47 
Non-U.S.42 27 37 
 $215 $537 $497 
Deferred tax provision (benefit)
U.S. federal$(164)$(775)$(274)
U.S. state and local3 (39)(27)
Non-U.S.5 41 (8)
 $(156)$(773)$(309)
Income tax provision (benefit)$59 $(236)$188 


The Company’s deferred income tax provision (benefit) includes a $6 million benefit, a $3 million benefit and an $8 million benefit for 2023, 2022 and 2021, respectively, for the effect of various changes in non-U.S. and U.S. federal and state tax rates.

International Paper made income tax payments, net of refunds, of $340 million, $345 million and $601 million in 2023, 2022 and 2021, respectively.

A reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision follows: 

In millions202320222021
Earnings (loss) from continuing
operations before income taxes
and equity earnings		$382 $1,511 $999 
Statutory U.S. income tax rate21 %21 %21 %
Tax expense (benefit) using statutory U.S. income tax rate80 317 210 
State and local income taxes2 44 15 
Impact of rate differential on non-U.S. permanent differences and earnings(10)1 5 
Foreign valuation allowance— 45 — 
Tax expense (benefit) on exchange of Sylvamo shares— (56)— 
Adjustment to tax basis of assets— — (14)
Non-deductible business expenses7 2 1 
Non-deductible impairments— 16 — 
Non-deductible compensation7 13 11 
Tax audits(4)6 9 
Timber Monetization Audit Settlement— (604)— 
Foreign derived intangible income deduction2 (8)(7)
US tax on non-U.S. earnings (GILTI and Subpart F)— 27 5 
Foreign tax credits8 8 (6)
General business and other tax credits(38)(43)(39)
Tax expense (benefit) on equity earnings(4)(1)— 
Legal entity restructuring gain (loss)4 — — 
Other, net5 (3)(2)
Income tax provision (benefit)$59 $(236)$188 
Effective income tax rate15 %(16)%19 %

The tax effects of significant temporary differences, representing deferred income tax assets and liabilities at December 31, 2023 and 2022, were as follows: 

In millions20232022
Deferred income tax assets:
Postretirement benefit accruals$67 $68 
Pension obligations61 18 
Tax credits182 175 
Net operating and capital loss carryforwards699 568 
Compensation reserves146 151 
Lease obligations116 108 
Environmental reserves114 119 
Other319 271 
Gross deferred income tax assets$1,704 $1,478 
Less: valuation allowance (a)(848)(677)
Net deferred income tax asset$856 $801 
Deferred income tax liabilities:
Intangibles$(141)$(147)
Investments3 (2)
Right of use assets(116)(108)
Plants, properties and equipment(1,650)(1,778)
Forestlands, related installment sales, and investment in subsidiary(485)(485)
Gross deferred income tax liabilities$(2,389)$(2,520)
Net deferred income tax liability$(1,533)$(1,719)
(a) The net change in the total valuation allowance for the years ended December 31, 2023 and 2022 was an increase of $171 million and a decrease of $(31) million, respectively.

Deferred income tax assets and liabilities are recorded in the accompanying consolidated balance sheet under the captions Deferred charges and other assets and Deferred income taxes, respectively. The $485 million of deferred tax liabilities for forestlands, related installment sales, and investment in subsidiary is attributable to a 2007 Temple-Inland installment sale of forestlands (see Note 15 - Variable Interest Entities).


A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 is as follows: 

In millions202320222021
Balance at January 1$(177)$(166)$(143)
(Additions) reductions for tax positions related to current year(13)(7)(13)
(Additions) for tax positions related to prior years(11)(10)(23)
Reductions for tax positions related to prior years1 3 1 
Settlements17 1 10 
Expiration of statutes of
limitations		11 1 1 
Currency translation adjustment(1)1 1 
Balance at December 31$(173)$(177)$(166)

If the Company were to prevail on the unrecognized tax benefits recorded, substantially all of the balances at December 31, 2023, 2022 and 2021 would benefit the effective tax rate. Pending audit settlements and the expiration of statutes of limitations could reduce the uncertain tax positions by $7 million during the next twelve months.

The Company accrues interest on unrecognized tax benefits as a component of interest expense. Penalties, if incurred, are recognized as a component of income tax expense. The Company had approximately $34 million and $29 million accrued for the payment of estimated interest and penalties associated with unrecognized tax benefits at December 31, 2023 and 2022, respectively.

The Company is currently subject to audits in the United States and other taxing jurisdictions around the world. Generally, tax years 2009 through 2022 remain open and subject to examination by the relevant tax authorities. The Company frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various tax jurisdictions.

On January 5, 2024, the Company received a notice of proposed adjustment from the Internal Revenue Service relating to investment tax credits for the 2017-2019 years that currently are under examination. We estimate the net incremental tax liability associated with the proposed adjustments would be approximately $50 million. We disagree with the proposed adjustments and plan to initiate the administrative appeals process in the first quarter. An unfavorable resolution in the current examination, future administrative proceedings, or future tax litigation could result in cash tax payments and could adversely impact the effective tax rate.
The Company provides for foreign withholding taxes and any applicable U.S. state income taxes on earnings intended to be repatriated from non-U.S. subsidiaries, which we believe will be limited in the future to each year's current earnings. No provision for these taxes on approximately $1.6 billion of undistributed earnings of non-U.S. subsidiaries as of December 31, 2023 has been made, as these earnings are considered indefinitely invested. Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted in a taxable manner is not practicable.

If management decided to monetize the Company’s foreign investments, we would recognize the tax cost related to the excess of the book value over the tax basis of those investments. This would include foreign withholding taxes and any applicable U.S. Federal and state income taxes. Determination of the
tax cost that would be incurred upon monetization of the Company’s foreign investments is not practicable; however, we do not believe it would be material.

The following details the scheduled expiration dates of the Company’s net operating loss and income tax credit carryforwards:
 
In millions2024
Through
2033		2034
Through
2043		IndefiniteTotal
U.S. federal and non-U.S. NOLs$1 $225 $426 $652 
State taxing jurisdiction NOLs (a)38 9 — 47 
U.S. federal, non-
U.S. and state tax credit carryforwards (a)		82 3 97 182 
Total$121 $237 $523 $881 
Less: valuation allowance (a)(83)(220)(475)(778)
Total, net$38 $17 $48 $103 
(a) State amounts are presented net of federal benefit.