Income Taxes

6 Months Ended

Jun. 30, 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 filed a carryback claim for the 2018 tax loss to the 2013 tax year, and plans to carry back the tax loss incurred in 2019, as well as the anticipated tax loss that will be generated in 2020, to its 2014-2015 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 $166.0 million for the six months ended June 30, 2020.

The effective tax rates for the three and six months ended June 30, 2020 were a benefit of 20.0% and a benefit of 63.6%, respectively, which differ from the U.S. statutory rate of 21.0% primarily due to the impact of the CARES Act, partially offset by the portion of the non-cash impairment charge that is not tax-effected because it is related to the noncontrolling interest. Our effective tax rates for the three and six months ended June 30, 2019 were 27.3% and 25.1%, respectively. These differ from the U.S. statutory rate primarily 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, the establishment of nexus in additional states, and non-deductible executive compensation.

Income tax refunds received, net of payments, during the six months ended June 30, 2020 totaled $4.4 million. The total income tax receivable position as of June 30, 2020 was $463.0 million, of which approximately $303.3 million relates to the 2018 and 2019 expected carryback claims. Approximately $150.0 million of the remaining receivable relates to year-to-date tax losses in 2020 that we expect to carry back in 2021, subject to the Company’s actual performance in the current year.

During the second quarter of 2020, we received IRS audit closing letters for the 2016 and 2017 tax years. The 2013-2015 tax years statutes will remain open due to tax loss carryback claims we filed during the quarter and plan to file in the third quarter. 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.