Unrecognized Tax Benefits that Would Impact Effective Tax Rate



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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS4.PAYABLES AND OTHER CURRENT LIABILITIES

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|   | June 30, |  | December 31, |
| (Dollars in millions) | 2022 |  | 2021 |
| Trade creditors | $ | 1,395  |  |  | $ | 1,228  |  |
| Accrued payroll and variable compensation | 147  |  |  | 311  |  |
| Accrued taxes | 182  |  |  | 138  |  |
| Post-employment obligations | 66  |  |  | 70  |  |
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| Dividends payable to stockholders | 96  |  |  | 101  |  |
| Other | 283  |  |  | 285  |  |
| Total payables and other current liabilities | $ | 2,169  |  |  | $ | 2,133  |  |

  
The "Other" above consists primarily of accruals for the current portion of interest payable, operating lease liabilities, environmental liabilities, and other miscellaneous accruals.  
5.INCOME TAXES

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|   | Second Quarter |  | First Six Months |
| (Dollars in millions) | 2022 |  | 2021 |  | 2022 |  | 2021 |
|  | $ |  | % |  | $ |  | % |  | $ |  | % |  | $ |  | % |
| Provision for income taxes and tax rate | $ | 124  |  |  | 33  | % |  | $ | 37  |  |  | —  | % |  | $ | 175  |  |  | 26  | % |  | $ | 99  |  |  | 44  | % |

  
Second quarter and first six months 2022 effective tax rates include adjustments to the provision for income taxes to reflect the tax implications of the divestiture of the adhesives resins business. Second quarter and first six months 2021 effective tax rates include a $21 million decrease to the provision for income taxes from the revaluation of deferred tax liabilities as a result of business held for sale classification of certain assets.  
At June 30, 2022 and December 31, 2021, Eastman had $204 million and $200 million, respectively, in unrecognized tax benefits. At June 30, 2022, it is expected that, as a result of the resolution of federal, state, and foreign examinations and appeals, and the expiration of various statutes of limitation, the total amounts of unrecognized tax benefits could decrease by up to $15 million within the next 12 months.  
Income tax incentives, in the form of tax holidays, have been granted to the Company in certain jurisdictions to attract investment and encourage industrial development. The expiration of these tax holidays varies by country. The tax holidays are conditional on the Company meeting certain requirements, including employment and investment thresholds; determination of compliance with these conditions may be subject to challenge by tax authorities in those jurisdictions. No individual tax holiday had a material impact to the Company's earnings in second quarter or first six months 2022 or 2021.  
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