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Income Taxes | 12 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income TaxesOn December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act represented significant U.S. federal tax reform legislation that included a permanent reduction to the U.S. federal corporate income tax rate. The permanent reduction to the federal corporate income tax rate resulted in a one-time benefit of $267.0 million related to the value of our deferred tax liabilities and a benefit of $3.2 million related to the lower blended tax rate on our earnings, in the year ended March 31, 2018, resulting in a net benefit of $270.2 million. Additionally, the tax reform legislation subjects certain of our cumulative foreign earnings and profits to U.S. income taxes through a deemed repatriation, which resulted in a charge of $1.9 million in the year ended March 31, 2018. On March 27, 2020, the CARES Act was enacted and signed into law in response to the COVID-19 pandemic. Certain provisions of the CARES Act impacted us and were reflected in our 2020 income tax provision computations. The CARES Act contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The modifications to Section 163(j) increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. This modification increased our allowable interest expense deduction and resulted in a lower taxable income for 2020. As a result of the CARES Act, it is anticipated that we will fully utilize the interest expense deduction on our 2020 tax return. Income (loss) before income taxes consists of the following:
| Year Ended March 31, |  |  |  |
(In thousands) | 2020 |  | 2019 |  | 2018
United States | $ | 167,508 |  |  | $ | (52,313) |  |  | $ | 84,435 |
Foreign | 23,643 |  |  | 14,258 |  |  | 22,651 |
| $ | 191,151 |  |  | $ | (38,055) |  |  | $ | 107,086 |
The provision (benefit) for income taxes consists of the following:
| Year Ended March 31, |  |  |  |
(In thousands) | 2020 |  | 2019 |  | 2018
Current |  |  |  |  |
Federal | $ | 24,051 |  |  | $ | 27,629 |  |  | $ | 31,327 |
State | 2,506 |  |  | 3,156 |  |  | 2,686 |
Foreign | 8,473 |  |  | 7,193 |  |  | 5,588 |
Deferred |  |  |  |  |
Federal | 14,119 |  |  | (35,760) |  |  | (270,796) |
State | (341) |  |  | (4,101) |  |  | (1,240) |
Foreign | 62 |  |  | (372) |  |  | (49) |
Total provision (benefit) for income taxes | $ | 48,870 |  |  | $ | (2,255) |  |  | $ | (232,484) |
The principal components of our deferred tax balances are as follows:
| March 31, |  |
(In thousands) | 2020 |  | 2019
Deferred Tax Assets |  |  |
Allowance for doubtful accounts and sales returns | $ | 4,996 |  |  | $ | 3,285 |
Inventory capitalization | 1,168 |  |  | 1,245 |
Inventory reserves | 705 |  |  | 1,267 |
Net operating loss carryforwards | 115 |  |  | 226 |
State income taxes | 8,896 |  |  | 9,003 |
Accrued liabilities | 1,308 |  |  | 1,785 |
Accrued compensation | 4,472 |  |  | 4,416 |
Stock compensation | 4,334 |  |  | 4,206 |
Foreign tax credit | 5,441 |  |  | 3,236 |
Interest | — |  |  | 154 |
Lease liability | 8,228 |  |  | — |
Unrealized foreign exchange loss | 257 |  |  | — |
Other | 13,191 |  |  | 7,691 |
Total deferred tax assets | $ | 53,111 |  |  | $ | 36,514 |
Deferred Tax Liabilities |  |  |
Property, plant and equipment | $ | (7,590) |  |  | $ | (6,002) |
Intangible assets | (438,601) |  |  | (425,134) |
Deferred cumulative catch-up adjustments - revenue recognition adjustments | (522) |  |  | (721) |
Right-of-use asset | (7,876) |  |  | — |
Total deferred tax liabilities | $ | (454,589) |  |  | $ | (431,857) |
Net deferred tax liability before valuation allowance | $ | (401,478) |  |  | $ | (395,343) |
Valuation allowance | (5,441) |  |  | (3,236) |
Net deferred tax liability | $ | (406,919) |  |  | $ | (398,579) |
The net deferred tax liability shown above is net of $0.9 million of foreign deferred tax assets as of March 31, 2020 and $1.0 million of foreign deferred tax assets as of March 31, 2019. At March 31, 2020 and 2019, we have a valuation allowance of $5.4 million and $3.2 million, respectively, related to certain deferred tax assets that we have concluded are not more likely than not to be realized. The increase in the valuation allowance related to unutilized foreign tax credit carryovers, as further described below. A reconciliation of the effective tax rate compared to the statutory U.S. Federal tax rate is as follows:
| Year Ended March 31, |  |  |  |  |  |  |  |  |  |
| 2020 |  |  |  | 2019 |  |  |  | 2018 |  |
(In thousands) |  |  | % |  |  |  | % |  |  |  | %
Income tax provision (benefit) at statutory rate | $ | 40,142 |  |  | 21.0 |  |  | $ | (7,992) |  |  | 21.0 |  |  | $ | 37,480 |  |  | 35.0 |
Foreign tax provision (benefit) | 2,498 |  |  | 1.3 |  |  | 2,866 |  |  | (7.5) |  |  | (2,084) |  |  | (1.9) |
State income taxes, net of federal income tax benefit | 1,606 |  |  | 0.8 |  |  | (1,710) |  |  | 4.5 |  |  | 1,414 |  |  | 1.3 |
Impact of tax legislation | — |  |  | — |  |  | — |  |  | — |  |  | (268,244) |  |  | (250.5) |
Goodwill impairment | — |  |  | — |  |  | 5,616 |  |  | (14.8) |  |  | — |  |  | — |
R&D | (320) |  |  | (0.2) |  |  | (629) |  |  | 1.7 |  |  | — |  |  | — |
Compensation limitations | 562 |  |  | 0.3 |  |  | 296 |  |  | (0.8) |  |  | — |  |  | — |
Valuation allowance | 2,205 |  |  | 1.2 |  |  | 2,627 |  |  | (6.9) |  |  | (2,828) |  |  | (2.6) |
Gain on sale | — |  |  | — |  |  | 1,312 |  |  | (3.4) |  |  | — |  |  | — |
Other | 2,177 |  |  | 1.2 |  |  | (4,641) |  |  | 12.1 |  |  | 1,778 |  |  | 1.6 |
Total provision (benefit) for income taxes | $ | 48,870 |  |  | 25.6 |  |  | $ | (2,255) |  |  | 5.9 |  |  | $ | (232,484) |  |  | (217.1) |
Uncertain tax liability activity is as follows:
| 2020 |  | 2019 |  | 2018
(In thousands) |  |  |  |  |
Balance – beginning of year | $ | 9,874 |  |  | $ | 10,827 |  |  | $ | 3,651 |
Additions based on tax positions related to the current year | 495 |  |  | 585 |  |  | 7,286 |
Reductions based on lapse of statute of limitations | — |  |  | (650) |  |  | (110) |
Payments and other movements | — |  |  | (888) |  |  | — |
Balance – end of year | $ | 10,369 |  |  | $ | 9,874 |  |  | $ | 10,827 |
We recognize interest and penalties related to uncertain tax positions as a component of income tax (benefit) expense. We did not incur any material interest or penalties related to income taxes in 2020, 2019 or 2018. We reasonably anticipate that uncertain tax positions could decrease in the next year by approximately $6.7 million, principally due to the statute of limitation expirations if recognized and would impact the effective tax rate in a future period. We are subject to taxation in the United States and various state and foreign jurisdictions, and we are generally open to examination from the year ended March 31, 2016 forward. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Pursuant to the FASB guidance, we elected to treat any potential GILTI inclusions as a period cost without recognizing any related potential deferred tax liabilities or assets. Our current foreign tax credit analysis is suggestive of annual foreign tax credit limitation anticipated to be less than foreign income taxes accrued during the year. The operating conditions giving rise to such excess credit condition may be anticipated to continue into future tax years. As a result, we have recognized a full valuation allowance for the deferred tax asset recognized in respect of unutilized foreign tax credit carryovers, which are limited to ten-year carryovers under IRC §904(c). Such excess credit condition did not exist in prior years; however, the Tax Act, enacted in 2017, required substantial changes in the manner of calculating foreign tax credit limitation.

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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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