|12 Months Ended|
Dec. 31, 2020
|Income Tax Disclosure [Abstract]|
|INCOME TAXES||INCOME TAXES
The provision from (benefit for) income taxes consisted of the following:
Domestic and foreign income (loss) before income taxes was as follows:
The provision from (benefit for) income taxes reconciles with the U.S. federal statutory rate, as follows:
We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between the financial reporting and income tax bases of assets and liabilities. For additional information about our income tax policy see Note 1 of the Notes to Consolidated Financial Statements.
Components of the deferred income tax assets and liabilities at December 31, 2020 and 2019, were as follows:
Our deferred income tax assets and deferred income tax liabilities at December 31, 2020 and 2019, are included in the accompanying Consolidated Balance Sheets as follows:
We record deferred income taxes on the temporary differences of our foreign subsidiaries and branches, except for the temporary differences related to undistributed earnings of subsidiaries which we consider indefinitely invested. As of December 31, 2020, we have indefinitely invested $247.8 million attributable to undistributed earnings of our Canadian and Chilean subsidiaries. If these earnings were not considered indefinitely invested, we estimate that $23.3 million of deferred withholding tax liability would have been provided. Further, we are permanently invested with respect to the original investment in foreign subsidiaries. Therefore, we have not provided the deferred tax assets on the outside basis of these subsidiaries as we have no intent to sell or divest of these subsidiaries. Cumulative undistributed earnings were subject to a transition tax as a result of the Tax Act which we estimated to be zero. However, the Company has provided for local country withholding taxes related to these earnings.
At December 31, 2020, we had U.S. federal and state net operating loss carryforwards of $11.5 million and $240.1 million, respectively, which will expire at various times between 2021 and 2039. We also had foreign net operating loss carryforwards totaling $1,037.5 million of which $312.4 million will expire between 2021 and 2037 and the remaining $725.1 million will carryforward indefinitely. Foreign capital loss carryforwards of $16.7 million may be carried forward indefinitely. We had foreign tax credit carryforwards of $17.4 million which will expire in the years 2025 through 2027. Additionally, we had state and foreign research and development credit carryforwards of $33.0 million. The U.S. credits expire between 2021 through 2029 and the foreign credits have an indefinite expiration period. We have state §163(j) interest limitation carryovers of $355.1 million which have an indefinite expiration period. The tax effected amount of the state §163(j) interest limitation carryovers is $3.3 million. The deferred tax asset related to the net operating loss, capital loss carryforwards, foreign tax credit carryforwards, §163(j) carryforwards, and research and development credit is $339.8 million of which $250.3 million has been fully reserved in the deferred tax valuation allowance.
Cash paid for income taxes, net of amounts refunded, was $62.0 million, $(2.5) million and $59.6 million during the twelve months ended December 31, 2020, 2019 and 2018, respectively.
We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes on our Consolidated Statements of Income (Loss).
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
We recorded liabilities of $27.1 million and $24.6 million for unrecognized tax benefits as of December 31, 2020 and 2019, respectively, which included interest and penalties of $3.1 million and $2.9 million, respectively. As of December 31, 2020 and 2019, the total amount of unrecognized benefits that, if recognized, would have affected the effective tax rate was $26.2 million and $23.8 million, respectively, which included interest and penalties of $2.8 million and $2.6 million, respectively. During 2020 and 2019, interest and penalties of $1.0 million were accrued in each period.
As of December 31, 2020 and 2019, the gross amount of unrecognized tax benefits was $41.5 million and $27.5 million, respectively. Of the total, $17.5 million in 2020 and $5.8 million in 2019 relate to unrecognized tax benefits for which no liability has been recorded associated with the carryforward of certain state attributes. If we were to prevail on all uncertain tax positions, the net effect would be a benefit of $24.0 million and $21.7 million in 2020 and 2019, respectively, exclusive of any benefits related to interest and penalties.
Equifax and its subsidiaries are subject to U.S. federal, state and international income taxes. We are generally no longer subject to federal, state or international income tax examinations by tax authorities for years before 2016. Due to the potential for resolution of state and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that Equifax’s gross unrecognized tax benefit balance may change within the next twelve months by a range of zero to $6.8 million.
The Tax Cuts and Jobs Act (“Tax Act”)
The Tax Act was enacted in the United States on December 22, 2017. The Tax Act reduced the U.S. federal corporate income tax rate to 21% from 35%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign-sourced earnings.
SAB 118 Measurement Period
We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Act in 2017 and throughout 2018. At December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Tax Act under ASC 740, Income Taxes, for the following aspects: re-measurement of deferred tax assets and liabilities, one-time transition tax and tax on global intangible low-taxed income. At December 31, 2018 we completed our accounting for all of the enactment-date income tax effects of the Tax Act. During 2018, no adjustments were required to the provisional amounts recorded at December 31, 2017. For provisional amounts recorded during 2018, adjustments were made in the fourth quarter of 2018 as a result of notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service (“Proposed Regulations”) that were issued in the quarter for the Section 163(j) interest limitation provisions and the foreign tax credits provisions
One-Time Transition Tax
The one-time transition tax is based on our total post-1986 earnings and profits (E&P), the tax on which we previously deferred from U.S. income taxes under U.S. law. The Company determined it was not subject to the one-time transition tax.
Deferred Tax Assets and Liabilities
As of December 31, 2017, we remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional amount of $85.1 million. Further analysis of certain aspects of the Tax Act and refinement of our calculations during the twelve months ending December 31, 2018 resulted in no material adjustments to our provisional amounts.
Global Intangible Low-Taxed Income (“GILTI”)We have elected to account for GILTI in the year the tax is incurred. We were not subject to the GILTI tax for the twelve months ended December 31, 2020, 2019 and 2018.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef