Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

8. Income Taxes

Deferred tax assets (liabilities) were comprised of the following at December 31:

(in millions)	2021			2020
Depreciation	$	(104.5	)	$	(83.8	)
Operating lease right-of-use assets		(42.1	)		(65.3	)
Deferred revenue		—			(3.3	)
Intangibles		(1.4	)		(2.9	)
State taxes		(17.9	)		(19.6	)
Other, including debt and interest		(13.7	)		(22.3	)
Deferred tax liabilities		(179.6	)		(197.2	)
Claims and insurance		88.6			84.4
Net operating loss carryforwards		219.1			216.7
Employee benefit accruals		55.6			23.9
Sale/leaseback transactions		50.8			53.0
Operating lease liabilities		46.3			68.7
Employer payroll taxes		9.7			20.0
Other, including debt and interest		39.0			37.0
Deferred tax assets		509.1			503.7
Valuation allowance		(328.1	)		(305.6	)
Net deferred tax assets		181.0			198.1
Net deferred tax asset	$	1.4		$	0.9

Cash paid, net of refunds received, for income taxes is nominal for all years presented.

As of December 31, 2021, the Company has remaining federal net operating loss carryforwards of approximately $795.0 million. Deemed ownership changes that occurred in January 2014 and in prior years imposed annual and cumulative limits under the Internal Revenue Code on the utilization of these carryforwards. These limits are not expected to inhibit the Company’s ability to utilize these losses over their carry forward periods. Carryforwards of $656.6 million incurred prior to 2018 expire between 2030 and 2037. Pursuant to the Tax Cuts and Jobs Act of 2017, net operating losses incurred after 2017 are available to be carried forward indefinitely. As of December 31, 2021, the Company has only nominal amounts of general business and other credit carryforwards, which will likely not be utilized and will expire between 2027 and 2031 if not used.

As of December 31, 2021 and 2020, a valuation allowance of $328.1 million and $305.6 million, respectively, has been established for deferred tax assets because, based on available sources of future taxable income, it is more likely than not that those assets will not be realized.

A reconciliation between income taxes at the federal statutory rate and the consolidated effective tax rate follows for the years ended December 31:

	2021			2020			2019
Federal statutory rate		21.0	%		21.0	%		21.0	%
State income taxes, net		(1.1	%)		(1.2	%)		(0.7	%)
Foreign tax rate differential		(1.3	%)		(1.0	%)		(2.6	%)
Permanent differences		(3.0	%)		(2.3	%)		(0.6	%)
Valuation allowance		(18.7	%)		(19.7	%)		(17.7	%)
Benefit from intraperiod tax allocation		—	%		20.0	%		—	%
Net change in unrecognized tax benefits		0.3	%		8.9	%		0.6	%
Other, net (primarily prior year return to provision)		(0.1	%)		1.1	%		4.0	%
Effective tax rate		(2.9	%)		26.8	%		4.0	%

The income tax provision (benefit) consisted of the following for the years ended December 31:

(in millions)	2021			2020			2019
Current:
Federal	$	—		$	(6.2	)	$	—
State		1.4			0.4			(3.3	)
Foreign		2.2			1.1			2.0
Current income tax expense (benefit)		3.6			(4.7	)		(1.3	)
Deferred:
Federal		—			(9.4	)		—
State		—			(5.2	)		—
Foreign		(0.5	)		(0.3	)		(3.0	)
Deferred income tax benefit		(0.5	)		(14.9	)		(3.0	)
Income tax expense (benefit)	$	3.1		$	(19.6	)	$	(4.3	)
Based on the income (loss) before income taxes:
Domestic	$	(111.3	)	$	(77.4	)	$	(104.7	)
Foreign		5.3			4.3			(3.6	)
Income (Loss) before income taxes	$	(106.0	)	$	(73.1	)	$	(108.3	)

The Company applies the intraperiod tax allocation rules to allocate income taxes among continuing operations, other comprehensive income (loss), and additional paid-in capital when our situation meets the criteria as prescribed in the rule. The Company adopted ASU 2019-12 (see Note 2 – Accounting Policies) on January 1, 2021. ASU 2019-12 removed the exception to the intraperiod tax allocation rules on a prospective basis; as such, there was no domestic deferred benefit recognized in 2021. During 2020, the Company recognized $14.6 million of deferred benefit in the statement of consolidated operations and an equal and offsetting deferred tax expense in other comprehensive income (loss) included in the statement of consolidated comprehensive income (loss) due to the application of the exception within the intraperiod tax allocation rules. This allocation has no effect on total tax provision or total valuation allowance. There was no domestic deferred benefit recognized in 2019 as the exception did not apply.

Uncertain Tax Positions

A rollforward of the total amount of unrecognized tax benefits for the years ended December 31 is as follows:

(in millions)	2021			2020
Unrecognized tax benefits at January 1	$	40.7		$	58.5
Increases related to:
Tax positions taken during a prior period		—			—
Tax positions taken during the current period		0.3			0.3
Decreases related to:
Tax positions taken during a prior period		—			(0.2	)
Lapse of applicable statute of limitations		(0.6	)		(17.9	)
Unrecognized tax benefits at December 31	$	40.4		$	40.7

At December 31, 2021 and 2020, there are $3.0 million and $3.3 million, respectively, of benefits that, if recognized, would affect the effective tax rate. The differences between these amounts and the amounts appearing in the table above represent unrecognized tax benefits which have been netted against deferred tax assets for net operating loss carryforwards and not recorded to the liability for unrecognized tax benefits. During the years ended December 31, 2021 and December 31, 2020 we paid no amounts to settle audits.

The Company experienced only nominal activity with regard to interest on uncertain tax positions for both 2021 and 2020. The Company accrued no penalties relative to uncertain tax positions in either 2021 or 2020. The Company has elected to treat interest and penalties on uncertain tax positions as “Interest expense” and “Other operating expenses”, respectively.

It is reasonably possible that the existing unrecognized tax benefits may decrease over the next twelve months by as much as $7.3 million because of developments in examinations, or from the expiration of statutes of limitation.

Tax years that remain subject to examination for our major tax jurisdictions as of December 31, 2021:

Statute remains open	2014-2020
Tax years not examined	2014-2021

In 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act contained numerous income tax provisions, such as relaxing the limitations on the deductibility of interest and the carryback of net operating losses for specific periods. The Company performed an analysis of these provisions and due to the unavailability of excess taxable income in the current or carry back periods, and the application of a valuation allowance to deferred tax assets, the Company's effective income tax rate and its tax provision are unaffected by the income tax provisions of the CARES Act.