Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.2.2
Income Taxes
 12 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Table 11.1: Components of Provision for Income Taxes
For the Year Ended September 30,
2022 2021 2020
(in thousands)
Current provision/(benefit):
Federal $ 45,042  $ 62,062  $ 65,735 
State and local 15,371  20,077  28,117 
Foreign 2,653  16,919  (2,154)
Total current provision for income taxes 63,066  99,058  91,698 
Deferred tax expense/(benefit):
Federal 7,107  (2,527) (12,984)
State and local 2,130  (590) (4,246)
Foreign 967  (3,460) (1,915)
Total deferred tax expense/(benefit) 10,204  (6,577) (19,145)
Provision for income taxes $ 73,270  $ 92,481  $ 72,553 
Table 11.2: Components of Income before Provision for Income Taxes by Country
For the Year Ended September 30,
2022 2021 2020
(in thousands)
Domestic $ 274,641  $ 339,647  $ 304,240 
Foreign 2,457  44,034  (17,178)
Income before provision for income taxes $ 277,098  $ 383,681  $ 287,062 
Table 11.3: Reconciliation of Tax Expense at Statutory Rate to Actual Tax Expense
For the Year Ended September 30,
2022 2021 2020
(dollars in thousands)
Tax expense at statutory rate $ 58,190  $ 80,573  $ 60,284 
Increase/(decrease) due to:
State income taxes, net of federal benefit 14,244  18,350  17,480 
Foreign taxation rate differentials (709) 4,212  (463)
Non-deductible expenses 882  2,254  2,200 
Valuation allowance - foreign jurisdictions 4,875  2,285  916 
Tax credits (5,239) (5,072) (4,149)
Excess tax expense/(benefits) from stock-based compensation 1,143  (6,008) (2,038)
Other (116) (4,113) (1,677)
Income tax expense $ 73,270  $ 92,481  $ 72,553 
U.S Federal Statutory tax rate 21.0  % 21.0  % 21.0  %
Effective tax rate 26.4  % 24.1  % 25.3  %
Table 11.4: Components of Deferred Tax Assets and Liabilities
As of September 30,
2022 2021
(in thousands)
Deferred tax assets/(liabilities):
Costs deductible in future periods $ 36,604  $ 28,921 
Deferred revenue 7,273  7,878 
Stock compensation 4,918  3,679 
Capital loss carryforward 2,391  — 
Net operating loss carryforwards 6,666  3,618 
Amortization of goodwill and intangibles (198,903) (203,094)
Capitalized software (15,445) (11,343)
Accounts receivable - unbilled (12,087) (15,317)
Property and equipment (2,577) (910)
Prepaid expenses (11,522) (7,913)
Financial instruments (8,261) 107 
Valuation allowance (8,075) (3,200)
Other (2,111) 3,926 
Net deferred tax liability $ (201,129) $ (193,648)
Our deferred tax assets and liabilities are held in various national and international jurisdictions that do not allow right of offset. Accordingly, our presentation of deferred taxes on our consolidated balance sheets is split between jurisdictions that show a net deferred tax asset and a net deferred tax liability.
Table 11.5: Deferred Tax Assets and Liabilities By Jurisdiction Positions
As of September 30,
2022 2021
(in thousands)
Total of tax jurisdictions with net deferred tax assets $ 4,970  $ 990 
Total of tax jurisdictions with net deferred tax liabilities (206,099) (194,638)
Net deferred tax liabilities $ (201,129) $ (193,648)
We consider our foreign earnings in excess of the earnings subject to the one-time transition tax to be indefinitely reinvested outside of the U.S. in accordance with the relevant accounting guidance for income taxes. Accordingly, no U.S. deferred taxes were recorded with respect to such earnings. As of September 30, 2022, our foreign subsidiaries held approximately $37.2 million of cash and cash equivalents in either U.S. Dollars or local currencies.
The provision for income taxes includes all provision to return adjustments included in the year recognized in the financial statements.
We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is "more-likely-than-not" that the position will be sustained upon examination. The total amount of unrecognized tax benefits that, if recognized, would affect our annual effective income tax rate was $7.3 million and $12.6 million at September 30, 2022 and 2021, respectively.
We report interest and penalties as a component of income tax expense. We recognized interest expense relating to unrecognized tax benefits of $0.1 million for each of the years ended September 30, 2021, and 2020, respectively, with no comparative amounts in fiscal year 2022. The net liability balance at September 30, 2021, includes approximately $2.1 million and less than $0.1 million of interest and penalties, respectively, with no comparative amounts at September 30, 2022.
We recognize and present uncertain tax positions on a gross basis (i.e., without regard to likely offsets for deferred tax assets, deductions and/or credits that would result from payment of uncertain tax amounts).
Table 11.6: Reconciliation of the Beginning and Ending Amounts of Potential Tax Benefits
For the Year Ended September 30,
2022 2021 2020
(in thousands)
Balance at beginning of year $ 12,642  $ 1,798  $ 3,001 
Additions for acquired unrecognized tax benefits —  11,244  — 
Decreases for lapse of statue of limitations (1,412) —  — 
Decreases for settlements with taxing authorities (4,785) —  — 
Increases for tax positions taken in current year 2,231  300  770 
Decreases for tax positions taken in current year —  (700) (1,973)
Balance at end of year $ 8,676  $ 12,642  $ 1,798 
We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are no longer subject to federal income tax examinations for years before 2019 and to state and local income tax examinations by tax authorities for years before 2017. In international jurisdictions, similar rules apply to filed income tax returns, although the tax examination limitations and requirements may vary. We are no longer subject to audit by tax authorities for foreign jurisdictions for years prior to 2018.