XML 34 R20.htm IDEA: XBRL DOCUMENT v3.24.2.u1
INCOME TAXES
 9 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES
11. INCOME TAXES

ASC Topic 740, Income Taxes requires the use of an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods. In calculating its estimated annual effective tax rate, the Company considers forecasted annual pre-tax income and estimated permanent book versus tax differences. Adjustments to the effective tax rate and management's estimates will occur as information and assumptions change.

Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date, the date in which the act is signed into law.

NJR evaluates its tax positions to determine the appropriate accounting and recognition of potential future obligations associated with uncertain tax positions. A tax benefit claimed, or expected to be claimed, on a tax return may be recognized only if it is more likely than not that the position will be upheld upon examination by the applicable taxing authority. Interest and penalties related to unrecognized tax benefits, if any, are recognized within income tax expense, and accrued interest and penalties are recognized within other noncurrent liabilities on the Unaudited Condensed Consolidated Balance Sheets.
Effective Tax Rate

The estimated annual effective tax rates were 21.7% and 21.9%, for the nine months ended June 30, 2024 and 2023, respectively.

To the extent there are discrete tax items that are not included in the estimated annual effective tax rate, the actual reported effective tax rate may differ from the estimated annual effective tax rate. During the nine months ended June 30, 2024 and 2023, discrete items totaled approximately $(0.8)M and $(16.3)M, respectively. During the nine months ended June 30, 2023, $(15.8)M related to the reversal of a valuation allowance for certain deferred tax assets, while the remaining amount related to excess tax (benefits) associated with the vesting of share-based awards for both fiscal 2024 and 2023. NJR’s effective tax rate was 21.4% and 15.9% during the nine months ended June 30, 2024 and 2023, respectively.

Other Tax Items

As of June 30, 2024 and September 30, 2023, the Company has tax credit carryforwards of approximately $186.0M and $191.2M, respectively, which each have a life of 20 years. The Company expects to utilize this entire carryforward prior to expiration, which would begin in fiscal 2037.

As of June 30, 2024 and September 30, 2023, the Company has state income tax net operating losses of approximately $627.1M and $631.2M, respectively. These state net operating losses have carry-forward periods dictated by the state in which they were incurred and range from seven to 20 years, with the majority expiring after 2036. The Company expects to utilize this entire carryforward prior to expiration, except for state income tax attributes for which the Company had a valuation allowance of approximately $0.7M as of both June 30, 2024 and September 30, 2023, for which the Company could not conclude were realizable on a more-likely-than-not basis.

In March 2024, the State of New Jersey commenced an examination of the Company's Corporate Business Tax return for NJR and certain subsidiaries for the fiscal periods ending September 30, 2019 through September 30, 2022.