12.     INCOME TAXES

The Company’s income tax provision consisted of the following:

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The primary factors causing income tax expense to be different than the federal statutory rate for 2021, 2020 and 2019 are as follows:

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Other includes the release of deferred tax liabilities, tax credits, valuation allowance, disallowed deductions, and other immaterial adjustments.

The provision for income taxes resulted in an effective tax rate of 26.1% on income before income taxes for the year ended December 31, 2021. The effective rate differs from the annual federal statutory rate primarily because of state and foreign income taxes and certain other adjustments and disallowed deductions.

For 2020 the effective tax rate was 26.5%. The effective rate differs from the annual federal statutory rate primarily because of state and foreign income taxes, adjustments related to the accelerated stock vesting expense and certain other disallowed deductions.

For 2019 the effective tax rate was 22.1%. The effective income tax rate differs from the annual federal statutory tax rate primarily because of state and foreign income taxes and beneficial adjustments related to the pension settlement.

During 2021, 2020 and 2019, the Company paid income taxes of $119.8 million, $81.2 million and $75.8 million, respectively, net of refunds.

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2021 and 2020 are as follows:

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Deferred tax assets are included in Other assets on the balance sheet.

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Analysis of the valuation allowance:

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As of December 31, 2021, the Company has net operating loss carryforwards for foreign and state income tax purposes of approximately $23.9 million, which will be available to offset future taxable income. If not used, these carryforwards will expire between 2022 and 2032. Management believes that it is unlikely to be able to utilize approximately $1.0 million of foreign net operating losses before they expire and has included a valuation allowance for the effect of these unrealizable operating loss carryforwards. The valuation allowance increased by $0.05 million due to foreign net operating losses. The Company has a foreign tax credit carryforward of $4.8 million which if not fully utilized will expire in 2026.

Earnings from continuing operations before income tax included foreign income of $32.5 million in 2021, $25.3 million in 2020 and $26.7 million in 2019. The Company’s international business is expanding, and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisition of unrelated companies.  Repatriation of cash from the Company’s international subsidiaries is not a part of the Company’s current business plan.

The total amount of unrecognized tax benefits at December 31, 2021 that, if recognized, would affect the effective tax rate is $1.0 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

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The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. In addition, the Company has subsidiaries in various state and international jurisdictions that are currently under audit for years ranging from 2013 through 2019. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S., income tax examinations for years prior to 2013.

It is reasonably possible that the amount of unrecognized tax benefits will decrease in the next 12 months.

The Company’s policy is to record interest and penalties related to income tax matters in income tax expense. Accrued interest and penalties were $0.2 million and $0.07 million as of December 31, 2021 and 2020, respectively. During 2021 the Company recognized interest and penalties of $0.2 million.