Annual report pursuant to Section 13 and 15(d)

Income taxes

v3.21.2
Income taxes
 12 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income taxes INCOME TAXES
Table 13.1: Components of Provision for Income Taxes
For the Year Ended September 30,
2021 2020 2019
(in thousands)
Current provision/(benefit):
Federal $ 62,062  $ 65,735  $ 37,123 
State and local 20,077  28,117  14,480 
Foreign 16,919  (2,154) 12,561 
Total current provision for income taxes 99,058  91,698  64,164 
Deferred tax (benefit)/expense:
Federal (2,527) (12,984) 12,627 
State and local (590) (4,246) 3,013 
Foreign (3,460) (1,915) (2,979)
Total deferred tax (benefit)/expense (6,577) (19,145) 12,661 
Provision for income taxes $ 92,481  $ 72,553  $ 76,825 
Table 13.2: Components of Income before Provision for Income Taxes by Country
For the Year Ended September 30,
2021 2020 2019
(in thousands)
Domestic $ 339,647  $ 304,240  $ 280,092 
Foreign 44,034  (17,178) 37,228 
Income before provision for income taxes $ 383,681  $ 287,062  $ 317,320 
Table 13.3: Reconciliation of Tax Expense at Statutory Rate to Actual Tax Expense
For the Year Ended September 30,
2021 2020 2019
(dollars in thousands)
Tax expense at statutory rate $ 80,573  $ 60,284  $ 66,637 
Increase/(decrease) due to:
State income taxes, net of federal benefit 18,350  17,480  14,825 
Foreign taxation rate differentials 4,212  (463) 1,210 
Non-deductible (benefit)/expense 2,254  2,200  2,682 
Valuation allowance - foreign jurisdictions 2,285  916  — 
Tax credits (5,072) (4,149) (3,730)
Toll tax —  —  (481)
Excess tax benefits from stock-based compensation (6,008) (2,038) (4,783)
Other (4,113) (1,677) 465 
Income tax expense $ 92,481  $ 72,553  $ 76,825 
U.S Federal Statutory tax rate 21.0  % 21.0  % 21.0  %
Effective tax rate 24.1  % 25.3  % 24.2  %
Table 13.4: Components of Deferred Tax Assets and Liabilities
As of September 30,
2021 2020
(in thousands)
Deferred tax assets/(liabilities):
Costs deductible in future periods $ 28,921  $ 24,127 
Deferred revenue 7,878  8,054 
Stock compensation 3,679  4,140 
Net operating loss carryforwards 418  252 
Amortization of goodwill and intangibles (203,094) (27,555)
Capitalized software (11,343) (10,076)
Accounts receivable - unbilled (15,317) (11,565)
Property and equipment (910) (2,365)
Prepaid expenses (7,913) (4,245)
Other 4,033  (3,589)
Net deferred tax liability $ (193,648) $ (22,822)
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 13.5: Deferred Tax Assets and Liabilities By Jurisdiction Positions
As of September 30,
2021 2020
(in thousands)
Total of tax jurisdictions with net deferred tax assets $ 990  $ 1,915 
Total of tax jurisdictions with net deferred tax liabilities (194,638) (24,737)
Net deferred tax liabilities $ (193,648) $ (22,822)
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, 2021, our foreign subsidiaries held approximately $84.4 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 $12.6 million and $1.8 million at September 30, 2021 and 2020, respectively.
We report interest and penalties as a component of income tax expense. In the fiscal years ended September 30, 2021, 2020, and 2019, we recognized interest expense relating to unrecognized tax benefits of less than $0.1 million in each year. The net liability balance at September 30, 2021 and 2020, includes approximately $2.1 million and less than $0.1 million, respectively, of interest and penalties.
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 13.6: Reconciliation of the Beginning and Ending Amounts of Potential Tax Benefits
For the Year Ended September 30,
2021 2020 2019
(in thousands)
Balance at beginning of year $ 1,798  $ 3,001  $ 721 
Additions for acquired unrecognized tax benefits 11,244  —  — 
Increases for tax positions taken in current year 300  770  2,280 
Decreases for tax positions taken in current year (700) (1,973) — 
Balance at end of year $ 12,642  $ 1,798  $ 3,001 
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 2018 and to state and local income tax examinations by tax authorities for years before 2016. 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 2017.