XML 33 R18.htm IDEA: XBRL DOCUMENT v3.23.1
Income Tax Expense
 12 Months Ended
Mar. 31, 2023
Income Tax Expense [Abstract]  
Income Tax Expense (Benefit)
8.INCOME TAXES
Income from continuing operations before income taxes was as follows:
Years Ended March 31,202320222021
United States operations$(16,759)$79,662 $326,991 
Ireland operations62,664 88,078 73,442 
Other locations operations111,443 146,763 117,100 
$157,348 $314,503 $517,533 
The components of the provision for income taxes related to income from continuing operations consisted of the following:
Years Ended March 31,202320222021
Current:
United States federal$138,208 $88,158 $57,550 
United States state and local33,234 21,438 16,272 
Ireland8,837 12,002 9,244 
Other locations61,446 53,354 36,699 
241,725 174,952 119,765 
Deferred:
United States federal(114,523)(73,833)7,523 
United States state and local(50,530)(17,124)(550)
Ireland(864)(739)(787)
Other locations(24,273)(11,623)(5,288)
(190,190)(103,319)898 
Total Provision for Income Taxes$51,535 $71,633 $120,663 
The total provision for income taxes can be reconciled to the tax computed at the Ireland statutory tax rate as follows:
Years Ended March 31,202320222021
National statutory tax rate12.5 %12.5 %12.5 %
(Decrease) increase in accruals for uncertain tax positions(0.1)%0.2 %(0.1)%
U.S. state and local taxes, net of federal income tax benefit(10.8)%1.4 %2.4 %
(Decrease) increase in valuation allowances (0.1)%0.9 %0.3 %
U.S. research and development credit(1.8)%(0.8)%(0.5)%
U.S. foreign income tax credit(1.2)%(1.1)%(0.3)%
Difference in non-Ireland tax rates8.6 %12.6 %8.3 %
U.S. federal audit adjustments — %— %2.1 %
Impairment of nondeductible goodwill29.0 %— %— %
Excess tax benefit for equity compensation(2.7)%(5.1)%(1.9)%
Tax rate changes on deferred tax assets and liabilities0.4 %2.3 %0.4 %
 U.S. tax reform impact, GILTI and FDII(1.3)%(0.9)%(0.6)%
Capitalized acquisition, redomiciliation costs— %1.8 %0.6 %
All other, net0.3 %(1.0)%0.1 %
Total Provision for Income Taxes32.8 %22.8 %23.3 %
Unrecognized Tax Benefits.  We classify uncertain tax positions and related interest and penalties as long-term liabilities within “Other liabilities” in our accompanying Consolidated Balance Sheets, unless they are expected to be paid within 12 months, in which case, the uncertain tax positions would be classified as current liabilities within “Accrued income taxes.” We recognize interest and penalties related to unrecognized tax benefits within “Income tax expense” in our accompanying Consolidated Statements of Income.
A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:
20232022
Unrecognized Tax Benefits Balance at April 1$2,906 $2,295 
Increases for tax provisions of current year63 — 
Decreases for tax provisions of prior year— (135)
Balances related to acquired/disposed businesses(503)746 
Other, including currency translation21 — 
Unrecognized Tax Benefits Balance at March 31$2,487 $2,906 
We recognized interest and penalties related to uncertain tax positions in the provision for income taxes. As of March 31, 2023 and 2022, we had $152 and $152 accrued for interest and penalties, respectively. If all unrecognized tax benefits were recognized, the net impact on the provision for income tax expense would be $2,640. The increase in unrecognized tax benefits from prior year is due to the additions of new positions. It is reasonably possible that during the next 12 months, there will be no material reductions in unrecognized tax benefits as a result of the expiration of various statutes of limitations or other matters.
We operate in numerous taxing jurisdictions and are subject to regular examinations by various United States federal, state and local, as well as foreign jurisdictions. We are no longer subject to United States federal examinations for years before fiscal 2018 and, with limited exceptions, we are no longer subject to United States state and local, or non-United States, income tax examinations by tax authorities for years before fiscal 2017. We remain subject to tax authority audits in various jurisdictions wherever we do business.
In the fourth quarter of fiscal 2021, we completed an appeals process with the U.S. Internal Revenue Service (the “IRS”) regarding proposed audit adjustments related to deductibility of interest paid on intercompany debt for fiscal years 2016 through 2017. An agreement was reached on final interest rates, which also impacts subsequent years through 2020. We estimate the total federal, state, and local tax impact of the settlement to be approximately $12,000, for the fiscal years 2016 through 2020, of which approximately $7,500 has been paid through March 31, 2023.
In May 2021, we received two notices of proposed tax adjustment from the IRS regarding deemed dividend inclusions and associated withholding tax. The notices relate to the fiscal and calendar year 2018. The IRS adjustments would result in a cumulative tax liability of approximately $50,000. We are contesting the IRS’s assertions. We have not established reserves related to these notices. An unfavorable outcome is not expected to have a material adverse impact on our consolidated financial position but it could be material to our consolidated results of operations and cash flows for any one period.
We estimate that the tax benefit from our Costa Rican Tax Holiday is $2,000 (or $0.02 per fully diluted share), annually. The Tax Holiday runs fully exempt from income tax through 2025, and partially exempt through 2029.
Deferred Taxes.  The significant components of the deferred tax assets and liabilities recorded in our accompanying balance sheets at March 31, 2023 and 2022 were as follows:
March 31,20232022
Deferred Tax Assets:
Post-retirement benefit accrual$1,737 $2,086 
Compensation15,858 14,340 
Net operating loss carryforwards37,667 25,550 
Accrued expenses13,150 12,092 
Insurance2,268 2,561 
Deferred income23,967 20,688 
Bad debt3,763 2,187 
Research & experimental expenditures15,382 — 
Operating leases (1)
46,781 44,401 
Foreign tax credit carryforwards33,559 36,036 
Other11,701 8,579 
Deferred Tax Assets205,833 168,520 
Less: Valuation allowance20,315 24,691 
Total Deferred Tax Assets185,518 143,829 
Deferred Tax Liabilities:
Depreciation and depletion98,601 110,951 
Operating leases (1)
45,834 43,593 
Intangibles630,589 755,980 
Pension2,644 2,004 
Other3,186 3,473 
Total Deferred Tax Liabilities780,854 916,001 
Net Deferred Tax Assets (Liabilities)$(595,336)$(772,172)
(1) For more information regarding our operating leases, see Note 10 titled, "Commitments and Contingencies."
At March 31, 2023, we had U.S. federal operating loss carryforwards of $9,407, which remain subject to a 20 year carryforward period. Additionally, we had non-U.S. operating loss carry forwards of $126,443. Although the majority of the non-U.S. carryforwards have indefinite expiration periods, those carryforwards that have definite expiration periods will expire if unused between fiscal years 2024 and 2044. In addition, we have recorded pre-valuation allowance tax benefits of $3,391 related to state operating loss carryforwards. If unused, these state operating loss carryforwards will expire between fiscal years 2024 and 2044. At March 31, 2023, we had $35,220 of pre-valuation allowance tax credit carryforwards of which $26,728 relates to offsets of deferred tax liabilities related to German branches of a U.S. subsidiary. These credit carryforwards can be used through fiscal 2033.
We review the need for a valuation allowance against our deferred tax assets. A valuation allowance of $20,315 has been applied to a portion of the net deferred tax assets because we do not believe it is more-likely-than-not that we will receive future benefit. The valuation allowance decreased during fiscal 2023 by $4,376.
Other than the tax expense previously recorded for the one-time transition tax on unremitted earnings of non-US subsidiaries, no additional provision has been made for income taxes on undistributed earnings of foreign subsidiaries as the Company’s position is that these amounts continue to be indefinitely reinvested.  The amount of undistributed earnings of subsidiaries was approximately $1,915,000 at March 31, 2023.  It is not practicable to estimate the additional income taxes and applicable withholding taxes that would be payable on the remittance of such undistributed earnings.

On October 8, 2021, the Organization for Economic Co-operation and Development ("OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting which agreed to a two-pillar solution to address tax challenges arising
from digitalization of the economy. On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD continues to release additional guidance on the two-pillar framework with widespread implementation anticipated by 2024. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by individual countries. The legislation is anticipated to be effective for our fiscal year beginning April 1, 2024.