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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income before income taxes consists of:
Years Ended December 31,202220212020
United States$65,350 $101,353 $91,555 
International269,354 220,302 209,600 
Total$334,704 $321,655 $301,155 
The provision (benefit) for income taxes is composed of:
Years Ended December 31,202220212020
Current:
U.S. Federal$12,791 $11,932 $9,934 
State/Local2,265 4,917 3,094 
International92,199 75,524 82,235 
$107,255 $92,373 $95,263 
Deferred:
U.S. Federal/State$(882)$(11,168)$(2,270)
International(11,224)(3,188)(5,928)
$(12,106)$(14,356)$(8,198)
Total$95,149 $78,017 $87,065 
A reconciliation of the provision for income taxes with the amount computed by applying the statutory federal income tax rate of 21% to income before provision for income taxes is as follows:
Years Ended December 31,202220212020
Income tax at statutory rate$70,288 $67,547 $63,243 
State income taxes, net of federal tax effect1,475 1,616 2,396 
Excess tax benefits from share-based compensation(3,306)(16,060)(11,625)
Deferred tax (benefits) charges, incl. tax rate changes(2,349)(1,040)4,110 
U.S. Global Intangible Low-Taxed Income ("GILTI") and Base Erosion Anti-Abuse Tax ("BEAT")3,129 — (3,909)
Valuation allowance1,486 4,485 1,332 
Legal entity reorganization5,850 — — 
Rate differential on earnings of foreign operations19,165 20,831 24,901 
Other items, net(589)638 6,617 
Actual income tax provision$95,149 $78,017 $87,065 
Effective income tax rate28.4 %24.3 %28.9 %
The 2022 effective tax rate of 28.4% includes a $5.9 million charge for taxes related to a legal entity reorganization intended to enhance our dividend and cash management capabilities. Excluding this impact, the effective tax rate was 26.7%. The provision for income tax is favorably impacted by excess tax benefits on deductible share-based compensation. The tax provision for 2022 reflects a $3.3 million benefit from this item compared with a $16.1 million and $11.6 million tax benefit for 2021 and 2020, respectively. Valuation allowances against deferred tax assets are comprised of cumulative losses, credits and other timing differences. Our mix of earnings has an unfavorable tax rate impact since a majority of our pretax income is earned in higher tax jurisdictions.
Significant deferred tax assets and liabilities as of December 31, 2022 and 2021 are composed of the following temporary differences:
20222021
Deferred Tax Assets:
Net operating loss carryforwards$45,823 $47,660 
Operating and finance leases20,974 22,492 
Pension liabilities8,178 29,770 
Share-based compensation9,970 6,764 
U.S. federal tax credits— 4,226 
U.S. state tax credits6,777 7,047 
Vacation and bonus14,681 13,450 
U.S. capitalized research expenditures27,840 19,633 
Inventory4,736 6,969 
Accrued liabilities and other reserves10,346 3,109 
Other11,744 16,194 
Total gross deferred tax assets$161,069 $177,314 
Less valuation allowance(46,239)(47,149)
Net deferred tax assets$114,830 $130,165 
Deferred Tax Liabilities:
Acquisition related intangibles$59,084 $68,174 
Depreciation and amortization29,142 30,997 
Operating and finance leases23,041 24,560 
Other6,563 7,489 
Total gross deferred tax liabilities$117,830 $131,220 
Net deferred tax liabilities$(3,000)$(1,055)
We evaluate the deferred tax assets and record a valuation allowance when it is believed it is more likely than not that the benefit will not be realized. We have established a valuation allowance for $39.2 million of the $45.8 million of tax effected net operating loss carryforwards. These losses are generally in locations that have not produced cumulative three year operating profit. A valuation allowance of $4.0 million has also been established against the $6.8 million of U.S. state tax credit carryforwards.
There is no expiration date on $42.5 million of the tax-effected net operating loss carryforwards and $3.3 million (tax effected) will expire in the years 2023 to 2042. The U.S. state tax credit carryforwards of $6.8 million (tax effected) will expire in the years 2023 to 2037.
None of the earnings accumulated outside of the U.S. will be subject to U.S. taxation under the current U.S. federal income tax laws. Aside from the earnings in Germany and the pre-2020 earnings in Italy, Switzerland and Colombia, we maintain our assertion that all other cash and distributable reserves at our non-U.S. affiliates will continue to be indefinitely reinvested. We estimate the amount of additional local income tax and withholding tax that would be payable on distributions to be in the range of $15 million to $20 million if earnings accumulated outside the U.S. are repatriated to the U.S.
We have not provided for taxes on certain tax-deferred income related to a foreign operation. The income arose predominately from government grants. Taxes of approximately $1.3 million would become payable in the event the terms of the grant are not fulfilled.
Income Tax Uncertainties
We provide a liability for the amount of tax benefits realized from uncertain tax positions. A reconciliation of the beginning and ending amount of income tax uncertainties is as follows:
202220212020
Balance at January 1$7,225 $4,504 $3,647 
Increases based on tax positions for the current year1,433 262 212 
Increases based on tax positions of prior years966 3,348 790 
Decreases based on tax positions of prior years(2,582)— — 
Settlements(80)(567)— 
Lapse of statute of limitations(43)(322)(145)
Balance at December 31$6,919 $7,225 $4,504 
The amount of income tax uncertainties that, if recognized, would impact the effective tax rate is approximately $6.9 million. We estimate that it is reasonably possible that the liability for uncertain tax positions will decrease by approximately $3.4 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions.
We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income taxes. As of December 31, 2022, 2021 and 2020, we had approximately $4.9 million, $4.6 million and $3.6 million, respectively, accrued for the payment of interest and penalties, of which approximately $0.3 million, $1.1 million and $1.7 million was recognized in income tax expense for the years ended December 31, 2022, 2021 and 2020, respectively.
Aptar or its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. The major tax jurisdictions we file in, with the years still subject to income tax examinations, are listed below:
Major Tax
Jurisdiction		Tax Years
Subject to
Examination
United States — Federal2019-2022
United States — State2018-2022
France2019-2022
Germany2018-2022
Italy2016-2022
China2012-2022