Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.3
Income Taxes
 12 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Table 11.1: Components of Provision for Income Taxes
For the Year Ended September 30,
2024 2023 2022
(in thousands)
Current provision/(benefit):
Federal $ 82,875  $ 34,033  $ 45,042 
State and local 26,951  12,332  15,371 
Foreign 25,791  584  2,653 
Total current provision for income taxes 135,617  46,949  63,066 
Deferred tax expense/(benefit):
Federal (16,347) (1,495) 7,107 
State and local (5,447) (673) 2,130 
Foreign (14,228) 3,720  967 
Total deferred tax expense/(benefit) (36,022) 1,552  10,204 
Provision for income taxes $ 99,595  $ 48,501  $ 73,270 
Table 11.2: Components of Income before Provision for Income Taxes by Country
For the Year Ended September 30,
2024 2023 2022
(in thousands)
Domestic $ 377,594  $ 198,115  $ 274,641 
Foreign 28,915  12,178  2,457 
Income before provision for income taxes $ 406,509  $ 210,293  $ 277,098 
Table 11.3: Reconciliation of Tax Expense at Statutory Rate to Actual Tax Expense
For the Year Ended September 30,
2024 2023 2022
(dollars in thousands)
Tax expense at statutory rate $ 85,367  $ 44,162  $ 58,190 
Increase/(decrease) due to:
State income taxes, net of federal benefit 21,582  11,501  14,244 
Foreign taxation rate differentials 875  (590) (709)
Non-deductible expenses 2,444  2,889  882 
Global intangible low taxed income 1,257  2,274  — 
Valuation allowance - foreign jurisdictions 734  2,010  4,875 
Tax credits (8,997) (6,645) (5,239)
Excess tax expense/(benefits) from stock-based compensation (1,656) (1,399) 1,143 
Other (2,011) (5,701) (116)
Income tax expense $ 99,595  $ 48,501  $ 73,270 
U.S. Federal Statutory tax rate 21.0  % 21.0  % 21.0  %
Effective tax rate 24.5  % 23.1  % 26.4  %
Table 11.4: Components of Deferred Tax Assets and Liabilities
As of September 30,
2024 2023
(in thousands)
Deferred tax assets/(liabilities):
Costs deductible in future periods $ 42,856  $ 37,036 
Deferred revenue 10,459  8,712 
Stock compensation 7,482  6,212 
Capital loss carryforward 7,872  2,391 
Net operating loss carryforwards 35,492  33,278 
Amortization of goodwill and intangibles (183,406) (189,316)
Capitalized software (23,661) (28,246)
Accounts receivable - unbilled (4,731) (7,963)
Property and equipment 1,286  (3,437)
Prepaid expenses (11,696) (10,906)
Financial instruments (2,413) (8,158)
Valuation allowance (31,956) (34,643)
Other (1,901) (6,399)
Net deferred tax liability $ (154,317) $ (201,439)
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,
2024 2023
(in thousands)
Total of tax jurisdictions with net deferred tax assets $ 14,801  $ 2,459 
Total of tax jurisdictions with net deferred tax liabilities (169,118) (203,898)
Net deferred tax liabilities $ (154,317) $ (201,439)
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, 2024, our foreign subsidiaries held approximately $56.1 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 $3.4 million and $4.9 million at September 30, 2024 and 2023, respectively.
We report interest and penalties as a component of income tax expense. 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,
2024 2023 2022
(in thousands)
Balance at beginning of year $ 6,233  $ 8,676  $ 12,642 
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 7,248  300  2,231 
Decreases for tax positions taken in current year (2,589) —  — 
Balance at end of year $ 10,892  $ 6,233  $ 8,676 
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 2021 and to state and local income tax examinations by tax authorities for years before 2019. 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 2020.