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Income Taxes
 6 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Prior to the Reorganization and IPO, the Company operated as a partnership for U.S. federal income tax purposes and therefore was not subject to U.S. federal and state income taxes. Subsequent to the Reorganization and IPO, all income attributable to SSG is subject to U.S. corporate income taxes.
In connection with the Greenspring acquisition, exchanges of Class B units of the Partnership for Class A common stock by certain limited partners of the Partnership in June and September 2021, and the vesting of RSUs to certain employees and directors, there was an aggregate net decrease of the deferred tax asset of $103.0 million. This resulted in the Company recording a deferred tax liability and reversing the full valuation allowance of $30.5 million of which $25.3 million resulted in a net tax benefit to the effective tax rate. Additionally, in connection with the exchange transactions, the Company recorded a corresponding Tax Receivable Agreements liability of $36.5 million, representing 85% of the incremental net cash tax savings for the Company due to the exchanging limited partners. See note 13 for more information.
The Company’s effective tax rate was (12.4)% and 0.8% for the three months ended September 30, 2021 and 2020, respectively, and 0.1% and 3.5% for the six months ended September 30, 2021 and 2020, respectively. The Company’s effective tax rate is dependent on many factors, including the jurisdictional mix of income subject to tax. Consequently, the effective tax rate can vary from period to period. The Company’s overall effective tax rate in each of the periods described above is less than the statutory rate primarily because a portion of income is allocated to non-controlling interests, as the tax liability on such income is borne by the holders of such non-controlling interests. Additionally, the Company recorded an income tax benefit of $25.3 million during the current period for the full release of the valuation allowance as a result of the deferred tax liability recorded in connection with the Greenspring acquisition, resulting in a net benefit to the Company’s consolidated effective tax rate of 9.9% for the six months ended September 30, 2021. For the period prior to the Reorganization and IPO, the Company operated as a partnership for U.S. federal income tax purposes and was not subject to U.S. federal and state income taxes.
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and adjusts the valuation allowance when it is more-likely-than-not that all or a portion of the deferred tax assets may not be realized.
As of September 30, 2021, the Company has not recorded any unrecognized tax benefits and does not expect there to be any material changes to uncertain tax positions within the next 12 months.
The Company files income tax returns as required by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company may be subject to examination by U.S. federal and certain state and local tax authorities. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.