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INCOME TAXES | 12 Months Ended
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Jun. 30, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 19. INCOME TAXES The Tax Cuts and Jobs Act (the “TCJA”) was enacted on December 22, 2017. Among other things, the TCJA reduced the U.S. federal corporate tax rate from 35.0 percent to 21.0 percent effective on January 1, 2018. In the second quarter of FY2019 the Company completed its assessment for the income tax effects of the TCJA, including true-up to all provisional amounts previously recorded, within the allowed one-year measurement period provided for under Staff Accounting Bulletin No. 118 on December 22, 2018. During the year ended June 30, 2019, the Company recognized a $2.2 million tax benefit related to the reduction of our provisional calculation of the one-time transition tax liability and a $0.5 million tax benefit related to its final analysis of its deferred tax remeasurement. The domestic and foreign components of income before provision for income taxes are as follows (in thousands):
|  | Year Ended June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Domestic |  | $ | 308,922 |  |  | $ | 279,360 |  |  | $ | 231,982 |
Foreign |  |  | 18,987 |  |  |  | 19,304 |  |  |  | 16,637 |
Income before income taxes |  | $ | 327,909 |  |  | $ | 298,664 |  |  | $ | 248,619 |
The components of income tax expense (benefit) are as follows (in thousands):
|  | Year Ended June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 41,675 |  |  | $ | 56,467 |  |  | $ | 54,425 |
State and local |  |  | 17,606 |  |  |  | 13,006 |  |  |  | 11,334 |
Foreign |  |  | 4,033 |  |  |  | 5,344 |  |  |  | 4,041 |
Total current |  |  | 63,314 |  |  |  | 74,817 |  |  |  | 69,800 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (27 | ) |  |  | (80,395 | ) |  |  | 13,076 |
State and local |  |  | (877 | ) |  |  | 3,481 |  |  |  | 2,917 |
Foreign |  |  | (105 | ) |  |  | (410 | ) |  |  | (845 | )
Total deferred |  |  | (1,009 | ) |  |  | (77,324 | ) |  |  | 15,148 |
Total income tax (benefit) expense |  | $ | 62,305 |  |  | $ | (2,507 | ) |  | $ | 84,948 |
Income tax expense differs from the amounts computed by applying the U.S. federal statutory income tax rate as a result of the following (in thousands):
|  | Year Ended June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Expected tax expense computed at federal statutory rate (1) |  | $ | 68,861 |  |  | $ | 83,805 |  |  | $ | 87,017 |
State and local taxes, net of federal benefit |  |  | 13,216 |  |  |  | 11,860 |  |  |  | 9,263 |
Nonincludible and nondeductible items, net |  |  | 1,971 |  |  |  | 1,832 |  |  |  | 1,087 |
Remeasurement of deferred taxes and transition tax |  |  | (2,182 | ) |  |  | (86,593 | ) |  |  | — |
Effect of foreign tax rates |  |  | (380 | ) |  |  | (1,261 | ) |  |  | (2,320 | )
R&D tax credit |  |  | (6,755 | ) |  |  | (3,630 | ) |  |  | (4,894 | )
Other tax credits |  |  | (2,138 | ) |  |  | (2,102 | ) |  |  | (1,321 | )
ASU 2016-09 share-based compensation |  |  | (7,493 | ) |  |  | (5,388 | ) |  |  | (1,390 | )
Other |  |  | (2,795 | ) |  |  | (1,030 | ) |  |  | (2,494 | )
Total income tax (benefit) expense |  | $ | 62,305 |  |  | $ | (2,507 | ) |  | $ | 84,948 |
| (1) | The U.S. federal statutory income tax rate for FY2019 is 21.0 percent. The federal statutory rate for FY2018 was a blended rate of 28.06 percent due to the TCJA. The federal statutory rate for FY2017 was 35.0 percent.
The tax effects of temporary differences that give rise to deferred taxes are presented below (in thousands):
|  | June 30, |
|  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Deferred compensation and post-retirement obligations |  | $ | 29,206 |  |  | $ | 27,842 |
Reserves and accruals |  |  | 30,205 |  |  |  | 30,180 |
Stock-based compensation |  |  | 9,881 |  |  |  | 7,793 |
Deferred rent |  |  | 4,876 |  |  |  | 3,750 |
Interest rate swap |  |  | 2,688 |  |  |  | — |
Total deferred tax assets |  |  | 76,856 |  |  |  | 69,565 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Goodwill and other intangible assets |  |  | (257,762 | ) |  |  | (238,020 | )
Unbilled revenue |  |  | (17,640 | ) |  |  | (17,363 | )
Prepaid expenses |  |  | (2,974 | ) |  |  | (3,991 | )
Interest rate swap |  |  | — |  |  |  | (3,701 | )
Other |  |  | (3,819 | ) |  |  | (7,370 | )
Total deferred tax liabilities |  |  | (282,195 | ) |  |  | (270,445 | )
Net deferred tax liability |  | $ | (205,339 | ) |  | $ | (200,880 | )
The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company's consolidated federal income tax returns through June 30, 2014 are no longer subject to audit. The Company is currently under examination by the Internal Revenue Service for year 2015; one state jurisdiction for years 2011 through 2017; and one foreign jurisdiction for years 2011 through 2015. The Company does not expect the resolution of these examinations to have a material impact on its results of operations, financial condition or cash flows. The effective income tax rate for FY2019 is higher than FY2018 primarily due to the favorable impact of the remeasurement of deferred taxes in FY2018 as a result of the TCJA. In both periods, the effective tax rate was also favorably affected by excess tax benefits from employee share-based payment awards under ASU 2016-09, a benefit from the research and development tax credit, and gains from the change in value of assets invested in corporate-owned life insurance (COLI) policies. U.S. income taxes have not been provided for undistributed earnings of foreign subsidiaries that have been permanently reinvested outside the United States. As of June 30, 2019, the estimated deferred tax liability associated with these undistributed earnings is approximately $0.9 million. The Company’s total liability for unrecognized tax benefits as of June 30, 2019, 2018 and 2017 was approximately $1.5 million, $4.1 million and $1.6 million, respectively. Of the unrecognized tax benefits at June 30, 2019, 2018 and 2017, $1.5 million, $4.1 million and $1.6 million, respectively, if recognized, would impact the Company’s effective tax rate. A reconciliation of the beginning and ending amount of unrecognized benefits is shown in the table below (in thousands):
|  | Year Ended June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Beginning of year |  | $ | 4,122 |  |  | $ | 1,639 |  |  | $ | 398 |
Additions based on current year tax positions |  |  | 676 |  |  |  | 2,483 |  |  |  | 1,475 |
Lapse of statute of limitations |  |  | (164 | ) |  |  | — |  |  |  | (234 | )
Reductions based on prior tax year positions |  |  | (3,104 | ) |  |  | — |  |  |  | — |
Settlement with taxing authorities |  |  | — |  |  |  | — |  |  |  | — |
End of year |  | $ | 1,530 |  |  | $ | 4,122 |  |  | $ | 1,639 |
The Company recognizes net interest and penalties as a component of income tax expense. Over the next 12 months, the Company does not expect a significant increase or decrease in the unrecognized tax benefits recorded at June 30, 2019. As of June 30, 2019, the entire balance of unrecognized tax benefits is included in other long-term liabilities.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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