Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.23.3
Income Taxes
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Table 11.1: Components of Provision for Income Taxes
For the Year Ended September 30,
2023 2022 2021
(in thousands)
Current provision/(benefit):
Federal $ 34,033  $ 45,042  $ 62,062 
State and local 12,332  15,371  20,077 
Foreign 584  2,653  16,919 
Total current provision for income taxes 46,949  63,066  99,058 
Deferred tax expense/(benefit):
Federal (1,495) 7,107  (2,527)
State and local (673) 2,130  (590)
Foreign 3,720  967  (3,460)
Total deferred tax expense/(benefit) 1,552  10,204  (6,577)
Provision for income taxes $ 48,501  $ 73,270  $ 92,481 
Table 11.2: Components of Income before Provision for Income Taxes by Country
For the Year Ended September 30,
2023 2022 2021
(in thousands)
Domestic $ 198,115  $ 274,641  $ 339,647 
Foreign 12,178  2,457  44,034 
Income before provision for income taxes $ 210,293  $ 277,098  $ 383,681 
Table 11.3: Reconciliation of Tax Expense at Statutory Rate to Actual Tax Expense
For the Year Ended September 30,
2023 2022 2021
(dollars in thousands)
Tax expense at statutory rate $ 44,162  $ 58,190  $ 80,573 
Increase/(decrease) due to:
State income taxes, net of federal benefit 11,501  14,244  18,350 
Foreign taxation rate differentials (590) (709) 4,212 
Non-deductible expenses 2,889  882  2,254 
Global intangible low taxed income 2,274  —  — 
Valuation allowance - foreign jurisdictions 2,010  4,875  2,285 
Tax credits (6,645) (5,239) (5,072)
Excess tax expense/(benefits) from stock-based compensation (1,399) 1,143  (6,008)
Other (5,701) (116) (4,113)
Income tax expense $ 48,501  $ 73,270  $ 92,481 
U.S. Federal Statutory tax rate 21.0  % 21.0  % 21.0  %
Effective tax rate 23.1  % 26.4  % 24.1  %
Table 11.4: Components of Deferred Tax Assets and Liabilities
As of September 30,
2023 2022
(in thousands)
Deferred tax assets/(liabilities):
Costs deductible in future periods $ 37,036  $ 36,604 
Deferred revenue 8,712  7,273 
Stock compensation 6,212  4,918 
Capital loss carryforward 2,391  2,391 
Net operating loss carryforwards 33,278  6,666 
Amortization of goodwill and intangibles (189,316) (198,903)
Capitalized software (28,246) (15,445)
Accounts receivable - unbilled (7,963) (12,087)
Property and equipment (3,437) (2,577)
Prepaid expenses (10,906) (11,522)
Financial instruments (8,158) (8,261)
Valuation allowance (34,643) (8,075)
Other (6,399) (2,111)
Net deferred tax liability $ (201,439) $ (201,129)
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,
2023 2022
(in thousands)
Total of tax jurisdictions with net deferred tax assets $ 2,459  $ 4,970 
Total of tax jurisdictions with net deferred tax liabilities (203,898) (206,099)
Net deferred tax liabilities $ (201,439) $ (201,129)
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, 2023, our foreign subsidiaries held approximately $31.1 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.
The tax loss on the sale of a small commercial practice in the United Kingdom and our Swedish subsidiary increased both the net operating loss carryforwards as well as the valuation allowance. In both cases, the losses are able to be carried forward indefinitely.
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 $4.9 million and $7.3 million at September 30, 2023 and 2022, respectively.
We report interest and penalties as a component of income tax expense. In the year ended September 30, 2021, we recognized interest expense relating to unrecognized tax benefits of $0.1 million, with no comparative amounts for the years ended September 30, 2023 and 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,
2023 2022 2021
(in thousands)
Balance at beginning of year $ 8,676  $ 12,642  $ 1,798 
Additions for acquired unrecognized tax benefits —  —  11,244 
Decreases for lapse of statute of limitations (2,051) (1,412) — 
Decreases for settlements with taxing authorities (692) (4,785) — 
Increases for tax positions taken in current year 300  2,231  300 
Decreases for tax positions taken in current year —  —  (700)
Balance at end of year $ 6,233  $ 8,676  $ 12,642 
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 2020 and to state and local income tax examinations by tax authorities for years before 2018. 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 2019.