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INCOME TAXES | 12 Months Ended
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Mar. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income tax expense were as follows:
|  | Fiscal Year Ended March 31,
|  | 2022 |  | 2021 |  | 2020
Current |  |  |  |  |  |
U.S. Federal |  | $ | 232,844 |  |  | $ | (227,309) |  |  | $ | (2,638) |
State and local |  | 26,333 |  |  | 39,542 |  |  | 18,410 |
Foreign |  | 8,486 |  |  | 9,250 |  |  | 15,625 |
Total current |  | 267,663 |  |  | (178,517) |  |  | 31,397 |
Deferred |  |  |  |  |  |
U.S. Federal |  | (146,581) |  |  | 245,624 |  |  | 59,856 |
State and local |  | 11,781 |  |  | (13,626) |  |  | 5,578 |
Foreign |  | 4,603 |  |  | — |  |  | — |
Total deferred |  | (130,197) |  |  | 231,998 |  |  | 65,434 |
Total |  | $ | 137,466 |  |  | $ | 53,481 |  |  | $ | 96,831 |
A reconciliation of the provision for income tax to the amount computed by applying the statutory federal income tax rate to income from continuing operations before income taxes for each of the three years ended March 31 is as follows:
|  | Fiscal Year Ended March 31,
|  | 2022 |  | 2021 |  | 2020
Income tax expense computed at U.S. federal statutory rate |  | $ | 126,981 |  |  | $ | 139,112 |  |  | $ | 121,681 |
Increases (reductions) resulting from: |  |  |  |  |  |
State and local income taxes, net of federal tax |  | 28,762 |  |  | 17,586 |  |  | 20,031 |
Foreign income taxes, net of federal tax |  | 9,243 |  |  | 6,679 |  |  | 12,344 |
Meals and entertainment |  | 343 |  |  | 653 |  |  | 1,761 |
Re-measurement of current year losses under CARES Act |  | — |  |  | (76,767) |  |  | — |
Excess tax benefits from stock-based compensation |  | (4,227) |  |  | (8,556) |  |  | (10,265) |
Research and development and other federal credits |  | (34,080) |  |  | (30,313) |  |  | (90,898) |
Executive compensation -162(m) |  | 3,614 |  |  | 3,813 |  |  | 2,346 |
Foreign-Derived Intangible Income (FDII) |  | (9,115) |  |  | (4,536) |  |  | (4,915) |
Changes in uncertain tax positions |  | 16,938 |  |  | 6,793 |  |  | 44,621 |
Other |  | (993) |  |  | (983) |  |  | 125 |
Income tax expense from operations |  | $ | 137,466 |  |  | $ | 53,481 |  |  | $ | 96,831 |
For the fiscal 2021 tax year, the Company generated a tax loss for U.S. Federal and state tax purposes resulting from the treatment of costs associated with property, plant, and equipment. As a result of a provision in the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), taxpayers are allowed to carry net operating losses generated in fiscal 2019, 2020 and 2021 back to the five prior tax years (fiscal years 2016 - 2020). Accordingly, the Company recorded a long-term income tax receivable in fiscal 2021 which was largely offset by a corresponding deferred tax liability reflected within the property and equipment deferred tax liability in the Company's significant components of deferred income tax assets and liabilities. The corporate tax rate for the Company was 35% during fiscal 2016 and 2017, 31.5% during fiscal 2018, and 21% since fiscal 2019. Carrying the loss back to these years with higher tax rates resulted in an income tax benefit in fiscal 2021 of $76.8 million related to the re-measurement of the loss for the applicable carryback fiscal years. The receivable remained outstanding at the end of fiscal 2022. For state tax purposes, an incremental net operating loss carryforward of $89.6 million that was generated was used in fiscal 2022 and will continue to be utilized in fiscal 2023 to offset state taxes. Including the impact of these state carryforwards, this transaction resulted in an incremental state deferred tax asset of $11.8 million. The Company has both income tax receivables and income tax payable on its consolidated balance sheet as follows:
|  | March 31,
|  | 2022 |  | 2021
Current income tax receivable |  | $ | 47,142 |  |  | $ | 175,541 |
Long term income tax receivable |  | $ | 341,738 |  |  | $ | 333,188 |
Current income tax payable |  | $ | 34,324 |  |  | $ | 30,694 |
The current income tax receivable as of March 31, 2022 represents estimated payments made in fiscal 2022 and prior periods that will be applied to the Company’s future U.S. federal and state tax returns. This amount is classified as prepaid expenses and other current assets on the consolidated balance sheet. The current income tax payable as of March 31, 2022 represents current liabilities associated with the Company’s amended fiscal 2020 U.S. state returns that the Company intends to file in fiscal 2023. This amount is classified as other current liabilities on the consolidated balance sheet. The long-term income tax receivable as of March 31, 2022 represents the carryback claim for the fiscal 2021 net operating loss and the amended U.S. federal return refund claims for research and development tax credits. This amount is classified as other long-term assets on the consolidated balance sheet. The significant components of the Company’s deferred income tax assets and liabilities were as follows:
|  | March 31,
|  | 2022 |  | 2021
Deferred income tax assets: |  |  |  |
Accrued expenses |  | $ | 80,344 |  |  | $ | 78,005 |
Deferred compensation |  | 56,361 |  |  | 52,191 |
Stock-based compensation |  | 9,783 |  |  | 5,724 |
Pension and postretirement benefits |  | 30,797 |  |  | 32,881 |
Net operating loss carryforwards |  | 44,118 |  |  | 98,471 |
Extended disability benefits |  | 2,426 |  |  | 2,838 |
Interest rate swaps |  | 75 |  |  | 9,955 |
Federal tax credits |  | — |  |  | 12,582 |
State tax credits |  | 24,268 |  |  | 27,243 |
Operating lease liabilities |  | 82,799 |  |  | 86,046 |
Other |  | — |  |  | 3,378 |
Total gross deferred income tax assets |  | 330,971 |  |  | 409,314 |
Less: Valuation allowance |  | (8,715) |  |  | (6,165) |
Total net deferred income tax assets |  | 322,256 |  |  | 403,149 |
Deferred income tax liabilities: |  |  |  |
Unbilled receivables |  | (209,753) |  |  | (245,809) |
Intangible assets |  | (56,657) |  |  | (69,519) |
Debt issuance costs |  | (1,435) |  |  | (1,488) |
Property and equipment |  | (198,940) |  |  | (336,321) |
Operating lease right-of-use assets |  | (59,401) |  |  | (62,442) |
Internally developed software |  | — |  |  | (20,309) |
Other |  | (3,345) |  |  | — |
Total deferred income tax liabilities |  | (529,531) |  |  | (735,888) |
Net deferred income tax liability |  | $ | (207,275) |  |  | $ | (332,739) |
Deferred tax balances arise from temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at the enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred tax asset will not be realized. In determining if the Company's deferred tax assets are realizable, management considers all positive and negative evidence, including the history of generating financial reporting earnings, future reversals of existing taxable temporary differences, projected future taxable income, as well as any tax planning strategies. As of March 31, 2022 and 2021, the Company had available federal, state, and foreign net operating loss ("NOL carryforwards") of $44.1 million and $98.5 million, respectively, that may be applied against future taxable income. The federal net operating loss of $1.4 million is primarily attributable to an acquisition and will begin to expire in fiscal 2037. The state net operating loss of $36.6 million is primarily attributable to the fiscal 2021 loss. The foreign net operating loss is primarily attributable to operations in jurisdictions where the Company is expanding its business. The Company recorded a partial valuation allowance against those federal, state and foreign net operating losses it believes will expire prior to utilization. Uncertain Tax Positions The Company maintains reserves for uncertain tax positions related to unrecognized income tax benefits. These reserves involve considerable judgment and estimation and are evaluated by management based on the best information available including changes in tax laws and other information. As of March 31, 2022, 2021, and 2020, the Company has recorded $79.9 million, $62.9 million, and $56.1 million, respectively, of reserves for uncertain tax positions which includes potential tax benefits of $78.5 million, $62.7 million, and $55.2 million, respectively, that, when recognized, impact the effective tax rate. As of March 31, 2022 and 2021, $3.1 million and $11.1 million, respectively, of the reserve is reflected as a reduction to deferred taxes and the remaining balance is recorded as a component of other long-term liabilities in the consolidated balance sheet. A reconciliation of the beginning and ending amount of potential tax benefits for the periods presented is as follows:
|  | March 31,
|  | 2022 |  | 2021 |  | 2020
Beginning of year |  | $ | 62,742 |  |  | $ | 55,221 |  |  | $ | 11,083 |
Increases in prior year position |  | 2,620 |  |  | 5,018 |  |  | 34,001 |
Increases in current year position |  | 13,530 |  |  | 12,753 |  |  | 10,970 |
Decreases in prior year position |  | (373) |  |  | — |  |  | (765) |
Settlements with taxing authorities |  | — |  |  | — |  |  | — |
Lapse of statute of limitations |  | — |  |  | (10,250) |  |  | (68) |
End of year |  | $ | 78,519 |  |  | $ | 62,742 |  |  | $ | 55,221 |
During fiscal 2022, the Company recognized an increase in reserves for uncertain tax positions of approximately $13.5 million related to an increase in research and development tax credits available for fiscal years 2022 and prior years. The Company recognized accrued interest and penalties of $1.7 million, $0.3 million and $0.5 million for fiscal 2022, 2021, and 2020, respectively, related to the reserves for uncertain tax positions in the income tax provision. Included in the total reserve for uncertain tax positions are accrued penalties and interest of approximately $2.9 million, $1.2 million and $0.9 million at March 31, 2022, 2021, and 2020, respectively. The Company is subject to taxation in the United States and various state and foreign jurisdictions. As of March 31, 2022, the Company's tax years ended March 31, 2016 and forward are open and subject to examination by the federal tax authorities. The other jurisdictions' currently open or under examination are not considered to be material. The Company is currently contesting tax assessments from the District of Columbia Office of Tax and Revenue ("DC OTR") for fiscal years 2013 through 2015. The assessment relates to $11.7 million of taxes, net of federal tax benefits, as of March 31, 2022. During fiscal 2022, the Company received notification that the District of Columbia Office of Administrative Hearings ruled in favor of the DC OTR. The Company is currently appealing the decision with the District of Columbia Court of Appeals ("DC COA"). In the fourth quarter of fiscal year 2022, the DC COA filed the briefing order, indicating that the Company's brief is due May 9, 2022 and, absent the DC OTR requesting an extension, DC OTR's response brief is due June 8, 2022. The Company filed its brief on May 9, 2022. As a result of the ruling in favor of the DC OTR, the Company made an $8.6 million payment during the second quarter of fiscal 2022 related to these assessments, consisting of $3.7 million of tax related to fiscal 2014 and 2015, as well as $4.9 million of penalties and interest. This payment was made under protest and, given the Company's belief that it will be recovered, the payment has been recorded as a long term income tax-receivable (a component of other long-term assets) on its consolidated balance sheet. There has been no impact to income tax expense during fiscal 2022 related to this payment. The Company has taken similar tax positions with respect to subsequent fiscal years. As of March 31, 2022, the Company does not maintain reserves for any uncertain tax positions related to the contested tax benefits related to 2013 through 2015, nor does it maintain reserves for the similar tax positions taken in the subsequent fiscal years. Management continues to evaluate this position quarterly to determine if a change in estimate is needed. If an adverse final resolution were to occur with respect to uncertain tax positions related to the contested tax benefits or the similar tax positions taken for fiscal years 2013 through 2020, the total potential future tax expense that would arise would be approximately $40.2 million to $55.8 million, net of federal benefit. Effective fiscal 2023, the Tax Cuts and Jobs Act of 2017 requires the capitalization of research and development costs for tax purposes, which can then be amortized over five years and 15 years for domestic and foreign costs, respectively. Congress has proposed tax legislation to delay the effective date of this change to 2026, but it is uncertain whether the proposed delay will ultimately be enacted into law. If the current effective date remains in place, the Company's initial assessment is that the Company would experience a material decrease in cash from operations, but that the deferred tax liability would be offset by a corresponding amount. The Company has a significant long-term income tax receivable as of March 31, 2022, which primarily represents the amended U.S. federal return refund claims for research and development tax credits and the carryback claim for the fiscal 2021 net operating loss. The Company is currently under federal audit by the Internal Revenue Service (“IRS”) for fiscal years 2016, 2017 and 2019 and the receipt of our U.S federal return refund claims is contingent upon the completion of the ongoing IRS audits.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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