Unrecognized tax benefits that would impact effective tax rate

[Table of Contents](#i82eec5aa49a24290a07e4a9f99c1e608_7)                                  be distributed in the future in the form of dividends or otherwise, the Company may be subject to foreign or U.S. taxes. The Company has the ability and intent to limit distributions so as to not make a distribution in excess of its investment in those subsidiaries. The Company will continue to monitor its global cash requirements and the need to recognize a deferred tax liability.Unrecognized tax benefits were as follows at December 31:

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| (In millions) | 2021 |  | 2020 |  | 2019 |
| Unrecognized tax benefits - Beginning of year | $ | 171  |  |  | $ | 145  |  |  | $ | 49  |  |
| Increases for assumed tax positions related to First Data | —  |  |  | —  |  |  | 82  |  |
| Increases for tax positions taken during the current year | 16  |  |  | 9  |  |  | 8  |  |
| Increases for tax positions taken in prior years | 5  |  |  | 53  |  |  | 16  |  |
| Decreases for tax positions taken in prior years | (41) |  |  | (23) |  |  | (2) |  |
| Decreases for settlements | (1) |  |  | (2) |  |  | (1) |  |
| Lapse of the statute of limitations | (26) |  |  | (11) |  |  | (7) |  |
| Unrecognized tax benefits - End of year | $ | 124  |  |  | $ | 171  |  |  | $ | 145  |  |
|  |  |  |  |  |  |

At December 31, 2021, unrecognized tax benefits of $86 million, net of federal and state benefits, would affect the effective income tax rate if recognized. The Company believes it is reasonably possible that the liability for unrecognized tax benefits may decrease by up to $24 million over the next twelve months as a result of possible closure of federal tax audits, potential settlements with certain states and foreign countries, and the lapse of the statute of limitations in various state and foreign jurisdictions.The Company classifies interest expense and penalties related to income taxes as components of its income tax provision. The income tax provision included interest expense (benefits) and penalties on unrecognized tax benefits of $(6) million in 2021, $3 million in 2020 and $2 million in 2019. Accrued interest expense and penalties related to unrecognized tax benefits totaled $15 million and $22 million at December 31, 2021 and 2020, respectively.The Company’s U.S. federal income tax returns for 2020 and 2021, and tax returns in certain states and foreign jurisdictions for 2005 through 2021, remain subject to examination by taxing authorities. 19. Commitments and Contingencies LitigationIn the normal course of business, the Company or its subsidiaries are named as defendants in lawsuits in which claims are asserted against the Company. In addition, the Company assumed certain legal proceedings in connection with the acquisition of First Data (see Note 4) primarily associated with its merchant acquiring business and certain tax matters. In the third quarter of 2021, the Company resolved a matter, for which the Company previously had accrued, with a class of merchants related to alleged violations by an independent sales organization resulting in a payment of $28 million. In the second quarter of 2020, the Company resolved a matter with the Federal Trade Commission related to a U.S.-based wholesale independent sales organization resulting in a payment of $40 million, for which the Company previously had accrued. The Company maintained accruals of $32 million at both December 31, 2021 and 2020, respectively, related to its various legal proceedings, primarily associated with the Company’s merchant acquiring business and certain tax matters as described above. The Company’s estimate of the possible range of exposure for various litigation matters in excess of amounts accrued is $0 million to approximately $50 million. In the opinion of management, the liabilities, if any, which may ultimately result from such lawsuits are not expected to have a material adverse effect on the Company’s consolidated financial statements.Electronic Payments TransactionsIn connection with the Company’s processing of electronic payments transactions, which are separate and distinct from the payment transactions described in Note 6, funds received from subscribers are invested from the time the Company collects the funds until payments are made to the applicable recipients. These subscriber funds are invested in short-term, highly liquid investments. Subscriber funds, which are not included in the Company’s consolidated balance sheets, can fluctuate significantly based on consumer bill payment and debit card activity and totaled approximately $1.6 billion and $1.7 billion at December 31, 2021 and 2020, respectively.Indemnifications and WarrantiesThe Company may indemnify its clients from certain costs resulting from claims of patent, copyright or trademark infringement associated with its clients’ use of the Company’s products or services. The Company may also warrant to clients that its 92
