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Income Taxes | 12 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 19—Income Taxes The Company’s income before income taxes by fiscal year consisted of the following:
| For the Years Ended September 30,
| 2024 |  | 2023 |  | 2022
| (in millions)
U.S. | $ | 14,537 |  |  | $ | 13,339 |  |  | $ | 11,051 |
Non-U.S. | 9,379 |  |  | 7,698 |  |  | 7,085 |
Total income before income taxes | $ | 23,916 |  |  | $ | 21,037 |  |  | $ | 18,136 |
For fiscal 2024, 2023 and 2022, U.S. income before income taxes included $5.1 billion, $4.2 billion, and $3.6 billion, respectively, of the Company’s U.S. entities’ income from operations outside of the U.S. Income tax provision by fiscal year consisted of the following:
| For the Years Ended September 30,
| 2024 |  | 2023 |  | 2022
| (in millions)
Current: |  |  |  |  |
U.S. federal | $ | 2,694 |  |  | $ | 2,630 |  |  | $ | 2,166 |
State and local | 298 |  |  | 293 |  |  | 104 |
Non-U.S. | 1,281 |  |  | 1,324 |  |  | 1,245 |
Total current taxes | 4,273 |  |  | 4,247 |  |  | 3,515 |
Deferred: |  |  |  |  |
U.S. federal | (132) |  |  | (339) |  |  | (231) |
State and local | (18) |  |  | (1) |  |  | (77) |
Non-U.S. | 50 |  |  | (143) |  |  | (28) |
Total deferred taxes | (100) |  |  | (483) |  |  | (336) |
Total income tax provision | $ | 4,173 |  |  | $ | 3,764 |  |  | $ | 3,179 |
The following table presents the components of deferred tax assets and liabilities:
| September 30,
| 2024 |  | 2023
| (in millions)
Deferred Tax Assets: |  |  |
Accrued compensation and benefits | $ | 221 |  |  | $ | 212 |
Accrued litigation | 374 |  |  | 365 |
Client incentives | 855 |  |  | 630 |
Net operating loss carryforwards | 206 |  |  | 232 |
Comprehensive loss | 79 |  |  | 72 |
Federal benefit of state taxes | 16 |  |  | 125 |
Other | 102 |  |  | 66 |
Valuation allowance | (212) |  |  | (149) |
Deferred tax assets | 1,641 |  |  | 1,553 |
Deferred Tax Liabilities: |  |  |
Property, equipment and technology, net | (295) |  |  | (350) |
Intangible assets | (6,404) |  |  | (6,063) |
Unrealized gains on equity securities | (81) |  |  | (103) |
Foreign taxes | (22) |  |  | (25) |
Deferred tax liabilities | (6,802) |  |  | (6,541) |
Net deferred tax liabilities | $ | (5,161) |  |  | $ | (4,988) |
As of September 30, 2024 and 2023, net deferred tax assets of $140 million and $126 million, respectively, were reflected in other assets on the consolidated balance sheets. Deferred tax assets were reduced by a valuation allowance. The fiscal 2024 and 2023 valuation allowances relate primarily to foreign net operating losses from subsidiaries acquired in recent years. As of September 30, 2024, the Company had $894 million of foreign net operating loss carryforwards, which may be carried forward indefinitely. The following table presents a reconciliation of the income tax provision to the amount of income tax determined by applying the U.S. federal statutory income tax rate to income before income taxes:
| For the Years Ended September 30,
| 2024 |  | 2023 |  | 2022
| (in millions, except percentages)
U.S. federal income tax at statutory rate | $ | 5,022 |  |  | 21 | % |  | $ | 4,418 |  |  | 21 | % |  | $ | 3,809 |  |  | 21 | %
State income taxes, net of federal benefit | 258 |  |  | 1 | % |  | 245 |  |  | 1 | % |  | 216 |  |  | 1 | %
Non-U.S. tax effect, net of federal benefit | (828) |  |  | (4 | %) |  | (758) |  |  | (3 | %) |  | (588) |  |  | (3 | %)
Reassessment of an uncertain tax position | — |  |  | — | % |  | (142) |  |  | (1 | %) |  | — |  |  | — | %
Conclusion of audits | (223) |  |  | (1 | %) |  | — |  |  | — | % |  | — |  |  | — | %
State tax apportionment position | — |  |  | — | % |  | — |  |  | — | % |  | (176) |  |  | (1 | %)
Other, net | (56) |  |  | — | % |  | 1 |  |  | — | % |  | (82) |  |  | — | %
Income tax provision | $ | 4,173 |  |  | 17 | % |  | $ | 3,764 |  |  | 18 | % |  | $ | 3,179 |  |  | 18 | %
In fiscal 2024 and fiscal 2023, the effective income tax rates were 17% and 18%, respectively. The effective tax rate in fiscal 2024 differs from the effective tax rate in fiscal 2023 primarily due to a tax position taken across jurisdictions, as well as the following: •during fiscal 2024, a $223 million tax benefit as a result of the conclusion of audits; and •during fiscal 2023, a $142 million tax benefit due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination. In fiscal 2023 and fiscal 2022, the effective income tax rates were 18% including the following: •during fiscal 2023, a $142 million tax benefit due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination; and •during fiscal 2022, a $176 million tax benefit due to a decrease in the state apportionment ratio as a result of a tax position taken related to a ruling. As of September 30, 2024 and 2023, current income taxes receivable of $832 million and $206 million, respectively, were included in prepaid expenses and other current assets; non-current income taxes receivable of $442 million and $961 million, respectively, were included in other assets; income taxes payable of $577 million and $1.5 billion, respectively, were included in accrued liabilities; and accrued income taxes of $1.4 billion and $1.9 billion, respectively, were included in other liabilities on the consolidated balance sheets. Effective through September 30, 2028, the Company’s operating hub in the Asia Pacific region is subject to a tax incentive in Singapore which is conditional upon meeting certain requirements. In fiscal 2024, 2023 and 2022, the tax incentive decreased Singapore tax by $419 million, $468 million and $362 million, and the gross benefit of the tax incentive on diluted earnings per share was $0.21, $0.22 and $0.17, respectively. The Company is required to inventory, evaluate and measure all uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. As of September 30, 2024, 2023 and 2022, the Company’s total gross unrecognized tax benefits were $3.8 billion, $3.5 billion and $2.7 billion, respectively, exclusive of interest and penalties described below. Included in the $3.8 billion, $3.5 billion and $2.7 billion were $1.4 billion, $1.6 billion and $1.3 billion of unrecognized tax benefits, respectively, that if recognized, would reduce the effective tax rate in a future period. The following table presents a reconciliation of beginning and ending unrecognized tax benefits by fiscal year:
| 2024 |  | 2023 |  | 2022
| (in millions)
Balance as of beginning of period | $ | 3,497 |  |  | $ | 2,683 |  |  | $ | 2,488 |
Increase in unrecognized tax benefits related to prior years | 148 |  |  | 515 |  |  | 10 |
Decrease in unrecognized tax benefits related to prior years | (322) |  |  | (190) |  |  | (143) |
Increase in unrecognized tax benefits related to current year | 556 |  |  | 510 |  |  | 350 |
Decrease related to settlements with taxing authorities | (127) |  |  | (17) |  |  | (19) |
Reduction related to lapsing statute of limitations | (2) |  |  | (4) |  |  | (3) |
Balance as of end of period | $ | 3,750 |  |  | $ | 3,497 |  |  | $ | 2,683 |
The increases in unrecognized tax benefits include gross timing differences and various tax positions across several jurisdictions. The decreases in unrecognized tax benefits primarily reflect changes as a result of the conclusion of audits. In fiscal 2024, 2023 and 2022, the Company recognized $29 million, $34 million and $15 million of net interest expense, respectively, related to uncertain tax positions. In fiscal 2024 and 2023, the Company accrued no significant penalties and in fiscal 2022, the Company reversed accrued penalties of $31 million related to uncertain tax positions. As of September 30, 2024 and 2023, the Company had accrued interest of $300 million and $271 million, respectively, and no significant accrued penalties related to uncertain tax positions. The Company’s U.S. federal income tax returns for fiscal 2016 through 2018 are currently under examination. For fiscal 2008 through 2015, an unresolved issue related to certain income tax deductions remains. During fiscal 2024, the Company filed a complaint with the U.S. Court of Federal Claims challenging the position of the Internal Revenue Service. Except for the unresolved issue, the federal statute of limitations has expired for fiscal years prior to 2016. In fiscal 2024, a resolution was reached regarding California refund claims for fiscal 2005 through 2011. The Company’s California income tax returns for fiscal 2012 through 2015 are currently under examination. The California statute of limitations has expired for fiscal years prior to 2012. In fiscal 2024, a resolution was reached regarding India tax assessments for taxable years falling within the period from fiscal 2010 to 2019. The Company will continue to appeal assessments received for subsequent periods. The Company is also subject to examinations by various state and foreign tax authorities. All material federal, state and foreign tax matters have been concluded for years through fiscal 2007. The timing and outcome of the final resolutions of the federal, state and foreign tax examinations and refund claims are uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next 12 months.

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