Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted. The CARES Act is a stimulus package that is a part of a series of bills meant to address the economic uncertainties associated with COVID-19. Due to the enactment of the CARES Act, Trinity plans to carry back the tax losses incurred in 2018 and 2019, as well as the anticipated tax losses that will be generated in 2020, to its 2013-2015 tax years. The income taxes to be recovered as a result of these anticipated carrybacks were paid at a federal rate of 35.0%, rather than the current rate of 21.0% in effect beginning with the 2018 tax year. The net deferred tax liability and the federal income tax receivable were remeasured to account for amounts that will be carried back, resulting in a tax benefit of $154.7 million for the three months ended March 31, 2020. The effective tax rate for the three months ended March 31, 2020 was a benefit of 990.6%, primarily due to the CARES Act.

Our effective tax rates, without the CARES Act impact above, were 47.7% and 22.2% for the three months ended March 31, 2020 and 2019, respectively. Our effective tax rates differ from the U.S. statutory rate of 21.0% due to the impacts of state income taxes, the incremental tax on profits of branches taxed in both U.S. and foreign jurisdictions, tax return true-ups, and non-deductible executive compensation.

Income tax payments, net of refunds received, during the three months ended March 31, 2020 totaled $2.3 million. The total income tax receivable position as of March 31, 2020 was $389.1 million, of which approximately $303 million relates to the 2018 and 2019 expected carryback claims.

Our federal tax years remain open under statute from 2014 forward. The 2014-2018 tax years have been reviewed by the Internal Revenue Service but remain open due to tax loss carryback claims we have filed. We have received a notice from the IRS that the returns have been accepted and our refund claim from the carryback is being processed. We have state tax returns that are under audit in the normal course of business, and our Mexican subsidiaries' tax return statutes remain open from 2014 forward. We believe we are appropriately reserved for any potential matters.