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Income Taxes | 12 Months Ended
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Aug. 31, 2021
Income Taxes [Abstract] |
Income Taxes | Note 13. Income Taxes Income before income taxes consisted of the following (in thousands):
| Fiscal Year Ended August 31,
| 2021 |  | 2020 |  | 2019
United States | $ | 40,949 |  | $ | 43,000 |  | $ | 47,962
Foreign (1) |  | 45,550 |  |  | 32,515 |  |  | 32,808
Income before income taxes | $ | 86,499 |  | $ | 75,515 |  | $ | 80,770
(1)Included in these amounts are income before income taxes for the EMEA segment of $38.8 million, $27.0 million and $26.6 million for the fiscal years ended August 31, 2021, 2020 and 2019, respectively. The provision for income taxes consisted of the following (in thousands):
| Fiscal Year Ended August 31,
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |  |  |  |
Federal | $ | 5,871 |  | $ | 7,267 |  | $ | 15,591
State |  | 1,007 |  |  | 822 |  |  | 800
Foreign |  | 10,944 |  |  | 7,139 |  |  | 7,679
Total current |  | 17,822 |  |  | 15,228 |  |  | 24,070
Deferred: |  |  |  |  |  |  |  |
United States |  | (1,201) |  |  | (619) |  |  | 843
Foreign |  | (351) |  |  | 196 |  |  | (51)
Total deferred |  | (1,552) |  |  | (423) |  |  | 792
Provision for income taxes | $ | 16,270 |  | $ | 14,805 |  | $ | 24,862
Deferred tax assets and deferred tax liabilities consisted of the following (in thousands):
| August 31, |  | August 31,
| 2021 |  | 2020
Deferred tax assets: |  |  |  |  |
Accrued payroll and related expenses | $ | 1,029 |  | $ | 891
Reserves and accruals |  | 1,115 |  |  | 1,079
Stock-based compensation expense |  | 2,387 |  |  | 2,162
Lease Accounting |  | 882 |  |  | 828
Uniform capitalization |  | 1,558 |  |  | 954
Tax credit carryforwards |  | 3,911 |  |  | 3,374
Other |  | 1,569 |  |  | 1,437
Total gross deferred tax assets |  | 12,451 |  |  | 10,725
Valuation allowance |  | (3,984) |  |  | (3,442)
Total net deferred tax assets |  | 8,467 |  |  | 7,283
Deferred tax liabilities: |  |  |  |  |
Property and equipment, net |  | (1,927) |  |  | (1,515)
Amortization of tax goodwill and intangible assets |  | (15,109) |  |  | (15,205)
Lease Accounting |  | (856) |  |  | (808)
Other |  | (118) |  |  | (582)
Total deferred tax liabilities |  | (18,010) |  |  | (18,110)
Net deferred tax liabilities | $ | (9,543) |  | $ | (10,827)
The Company had state net operating loss (“NOL”) carryforwards of $4.5 million and $3.9 million as of August 31, 2021 and 2020, respectively, which generated a net deferred tax asset of $0.3 million as of both August 31, 2021 and 2020. The state NOL carryforwards, if unused, will expire between fiscal year 2022 and 2041. The Company also had tax credit carryforwards of $3.9 million and $3.4 million as of August 31, 2021 and 2020, respectively, of which $3.7 million and $3.2 million, respectively, is attributable to U.K. tax credit carryforwards, which do not expire. Future utilization of the U.K. tax credit carryforwards and certain state credit carryforwards is uncertain and is dependent upon several factors that may not occur, including the generation of future taxable income in certain jurisdictions. At this time, management cannot conclude that it is “more likely than not” that the related deferred tax assets will be realized. Accordingly, a valuation allowance has been recorded against the related deferred tax asset associated with the U.K. tax credit carryforwards and certain state carryforwards. A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows (in thousands):
| Fiscal Year Ended August 31,
| 2021 |  | 2020 |  | 2019
Amount computed at U.S. statutory federal tax rate | $ | 18,165 |  | $ | 15,858 |  | $ | 16,962
State income taxes, net of federal tax benefits |  | 803 |  |  | 853 |  |  | 963
Effect of foreign operations |  | 629 |  |  | 297 |  |  | 318
Net benefit from GILTI/FDII |  | (1,764) |  |  | (1,582) |  |  | (1,404)
Tax Cuts and Jobs Act: |  |  |  |  |  |  |  |
Toll tax, net of foreign tax credits |  | - |  |  | - |  |  | 8,665
Benefit from stock compensation |  | (1,813) |  |  | (1,129) |  |  | (1,107)
Other |  | 250 |  |  | 508 |  |  | 465
Provision for income taxes | $ | 16,270 |  | $ | 14,805 |  | $ | 24,862
The provision for income taxes was 18.8% and 19.6% of income before income taxes for the fiscal years ended August 31, 2021 and 2020, respectively. The decrease in the effective income tax rate from period to period was primarily due to an increase in excess tax benefits from settlements of stock-based equity awards, as well as increased benefits from earnings from foreign operations. Reconciliations of the beginning and ending amounts of the Company’s gross unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands):
| Fiscal Year Ended August 31,
| 2021 |  | 2020
Unrecognized tax benefits - beginning of fiscal year | $ | 9,352 |  | $ | 9,384
Net increases (decreases) - prior period tax positions |  | 31 |  |  | -
Net increases - current period tax positions |  | 254 |  |  | 230
Expirations of statute of limitations for assessment |  | (323) |  |  | (262)
Unrecognized tax benefits - end of fiscal year | $ | 9,314 |  | $ | 9,352
Gross unrecognized tax benefits totaled $9.3 million and $9.4 million for the fiscal years ended August 31, 2021 and 2020, respectively, of which $9.1 million and $9.2 million in fiscal years ended August 31, 2021 and 2020, respectively, would affect the Company’s effective income tax rate if recognized. Interest and penalties related to uncertain tax positions included in tax expense was $0.3 million and $0.5 million for fiscal year ending August 31, 2021 and 2020, respectively, primarily related to the toll tax liability reserve. The total balance of accrued interest and penalties related to uncertain tax positions was $1.2 million and $1.0 million for the fiscal years ended August 31, 2021 and 2020, respectively. The Company is subject to taxation in the U.S. and in various state and foreign jurisdictions. Due to expired statutes and closed audits, the Company’s federal income tax returns for years prior to fiscal year 2018 are not subject to examination by the U.S. Internal Revenue Service. The Company is currently under audit in various state jurisdictions for fiscal years 2017 through 2020. Generally, for the majority of state and foreign jurisdictions where the Company does business, periods prior to fiscal year 2017 are no longer subject to examination. The Company has estimated that up to $0.3 million of unrecognized tax benefits related to income tax positions may be affected by the resolution of tax examinations or expiring statutes of limitation within the next twelve months. Audit outcomes and the timing of settlements are subject to significant uncertainty. ‎

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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