Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

8.Income Taxes

The following is an analysis of the components of the consolidated income tax provision (dollars in millions):

	Year Ended December 31,
	2021			2020			2019
Current income tax provision -
U.S. federal	$	158.0		$	109.4		$	123.2
State and local		50.1			27.5			37.0
Foreign		0.1			0.1			0.1
Total current provision for taxes		208.2			137.0			160.3
Deferred income tax provision (benefit) -
U.S. federal		62.1			26.8			55.3
State and local		(2.6	)		8.0			5.0
Foreign		(0.1	)		(0.1	)		—
Total deferred provision (benefit) for taxes		59.4			34.7			60.3
Total provision for taxes	$	267.6		$	171.7		$	220.6

The effective tax rate varies from the U.S. federal statutory tax rate principally due to the following (dollars in millions):

	2021			2020			2019
Provision computed at U.S. federal statutory rate of 21%	$	232.8		$	132.9		$	192.6
State and local taxes, net of federal benefit		42.6			28.4			35.7
Goodwill impairment (a)		—			11.6			—
Other		(7.8	)		(1.2	)		(7.7	)
Total	$	267.6		$	171.7		$	220.6

(a)For additional information regarding the impairment of goodwill within our Paper reporting unit, see Note 9, Goodwill and Intangible Assets.

The following details the scheduled expiration dates of our tax effected net operating loss (NOL) and other tax carryforwards at December 31, 2021 (dollars in millions):

	2022 Through 2031		2032 Through 2041		Indefinite		Total
U.S. federal NOLs	$	22.2	$	—	$	—	$	22.2
State taxing jurisdiction NOLs		1.1		0.1		—		1.2
U.S. federal tax credit carryforwards		0.1		—		—		0.1
U.S. federal and non-U.S. capital loss carryforwards		0.6		—		0.1		0.7
Total	$	24.0	$	0.1	$	0.1	$	24.2

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Deferred income tax assets and liabilities at December 31 are summarized as follows (dollars in millions):

	December 31,
	2021			2020
Deferred tax assets:
Lease obligations	$	61.4		$	60.6
Employee benefits and compensation		44.7			39.3
Pension and postretirement benefits		33.8			70.1
Net operating loss carryforwards		23.4			27.2
Restricted stock and performance units		8.5			9.6
Inventories		6.8			5.9
Accrued liabilities		6.3			5.3
Capital loss and general business credit carryforwards		0.7			0.6
Derivatives		0.1			0.1
Gross deferred tax assets		185.7			218.7
Valuation allowance (b)		(0.6	)		(0.5	)
Net deferred tax assets	$	185.1		$	218.2
Deferred tax liabilities:
Property, plant and equipment	$	(518.0	)	$	(465.6	)
Goodwill and intangible assets		(73.3	)		(72.7	)
Right-of-use assets		(59.7	)		(59.3	)
Total deferred tax liabilities	$	(651.0	)	$	(597.6	)
Net deferred tax liabilities (c)	$	(465.9	)	$	(379.4	)

(b)Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. Both the 2021 and 2020 valuation allowance relate to capital losses. We do not expect to generate capital gains before the capital losses expire. If or when recognized, the tax benefits relating to the reversal of any or all of the valuation allowance would be recognized as a benefit to income tax expense.

(c)As of December 31, 2021, we did not recognize U.S. deferred income taxes on our cumulative total of undistributed foreign earnings for our foreign subsidiaries. We indefinitely reinvest our earnings in operations outside the United States. It is not practicable to determine the amount of unrecognized deferred tax liability on these undistributed earnings because the actual tax liability, if any, is dependent on circumstances existing when the repatriation occurs.

Cash payments for federal, state, and foreign income taxes were $210.5 million, $115.6 million, and $172.7 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The following table summarizes the changes related to PCA’s gross unrecognized tax benefits excluding interest and penalties (dollars in millions):

	2021			2020			2019
Balance as of January 1	$	(5.2	)	$	(4.8	)	$	(4.6	)
Increases related to prior years’ tax positions		—			—			(0.1	)
Increases related to current year tax positions		(0.3	)		(0.4	)		(0.4	)
Decreases related to prior years' tax positions		0.2			—			—
Settlements with taxing authorities		3.0			—			—
Expiration of the statute of limitations		0.4			—			0.3
Balance at December 31	$	(1.9	)	$	(5.2	)	$	(4.8	)

At December 31, 2021, PCA had recorded a $1.9 million gross reserve for unrecognized tax benefits, excluding interest and penalties. Of the total, $1.9 million (net of the federal benefit for state taxes) would impact the effective tax rate if recognized.

PCA recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. For the years ended December 31, 2021 and 2020, we had $0.2 million and $1.2 million, respectively, of interest and penalties recorded for unrecognized tax benefits. PCA does not expect the unrecognized tax benefits to change significantly over the next 12 months.

PCA is subject to income taxation in the United States, various state and local jurisdictions, Canada and Hong Kong. A federal examination of the 2016 tax year concluded in March 2021. The tax years 2018 - 2021 remain open to federal examination. The tax years 2017 - 2021 remain open to state examinations. Some foreign tax jurisdictions are open to examination for the 2009 tax year forward. Through the Boise acquisition, PCA recorded net operating losses and credit carryforwards from 2008 through 2011 and 2013 that are subject to examinations and adjustments for at least three years following the year in which utilized.