Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate was 22.6 percent and 21.9 percent for the three months ended September 30, 2019 and 2018, respectively, and 21.4 percent and 21.9 percent for the nine months ended September 30, 2019 and 2018, respectively. The changes in tax rates for both periods primarily reflect the resolution of certain prior years' tax items.

We are under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which we have significant business operations. The tax years under examination and open for examination vary by jurisdiction. In 2018 we settled our U.S. federal income tax audits for tax years 2008-2014, and the statute of limitations for these years remain open through 2019. Tax years from 2016 onwards are open for examination by the IRS.

We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next 12 months by as much as $83 million, principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the deductibility of certain expenses or losses and the attribution of taxable income to a particular jurisdiction or jurisdictions. Of the $83 million of unrecognized tax benefits, approximately $65 million relates to amounts that, if recognized, would impact the effective tax rate in a future period.