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INCOME TAXES
 12 Months Ended
Mar. 31, 2024
INCOME TAXES [Abstract]  
INCOME TAXES
14. INCOME TAXES

We account for our tax positions in accordance with Codification Topic 740. Under the guidance, we evaluate uncertain tax positions based on the two-step approach. The first step is to evaluate each uncertain tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in an audit, including resolution of related appeals or litigation processes, if any. For tax positions that are not likely of being sustained upon audit, the second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

As of March 31, 2024, and 2023, we do not have any unrecognized tax benefits for uncertain tax positions. We recognize accrued interest and penalties related to unrecognized tax benefits as part of income tax expense.

We file income tax returns, including returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. The tax years ended March 31, 2021, March 31, 2022, and March 31, 2023, are subject to examination by federal and state taxing authorities.

A reconciliation of income taxes computed at the statutory federal income tax rate of 21.0% to the provision for income taxes included in the consolidated statements of operations is as follows (in thousands, except percentages):

 
Year Ended March 31,
  
   
2024
    
2023
    
2022
  
Income tax expense computed at the US statutory federal rate
  
$
33,830
    
$
34,224
    
$
30,845
  
State income tax expense—net of federal benefit
    
9,624
      
8,754
      
8,937
  
Non-deductible executive compensation
    
1,718
      
1,708
      
1,749
  
Other
    
145
      
(1,068
)
    
(247
)
Provision for income taxes
  
$
45,317
    
$
43,618
    
$
41,284
  
Effective income tax rate
    
28.1
%
    
26.8
%
    
28.1
%

The components of the provision for income taxes are as follows (in thousands):

 
Year Ended March 31,
  
   
2024
    
2023
    
2022
  
Current:
                  
Federal
  
$
34,232
    
$
30,928
    
$
32,309
  
State
    
12,371
      
10,110
      
11,681
  
Foreign
    
1,370
      
499
      
894
  
Total current expense
    
47,973
      
41,537
      
44,884
  
                         
Deferred:
                        
Federal
    
(2,419
)
    
1,301
      
(3,289
)
State
    
(188
)
    
970
      
(370
)
Foreign
    
(49
)
    
(190
)
    
59
  
Total deferred expense (benefit)
    
(2,656
)
    
2,081
      
(3,600
)
                         
Provision for income taxes
  
$
45,317
    
$
43,618
    
$
41,284
  

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities were as follows (in thousands):

 
March 31,
  
   
2024
    
2023
  
Deferred tax assets:
            
Accrued vacation
  
$
2,666
    
$
2,251
  
Deferred revenue
    
6,934
      
5,448
  
Allowance for credit losses
    
1,278
      
1,063
  
Restricted stock
    
738
      
654
  
Other deferred tax assets
    
1,737
      
1,697
  
Accrued bonus
    
2,641
      
2,323
  
Lease liabilities
    
4,503
      
3,939
  
Other credits and carryforwards
    
251
      
277
  
Gross deferred tax assets
    
20,748
      
17,652
  
Less: valuation allowance
    
(70
)
    
(112
)
Net deferred tax assets
    
20,678
      
17,540
  
                 
Deferred tax liabilities:
                
Property and equipment
    
(2,724
)
    
(2,926
)
Operating leases
    
(3,889
)
    
(3,789
)
Prepaid expenses
    
(1,807
)
    
(1,729
)
Right-of-use assets
    
(4,113
)
    
(3,885
)
Tax deductible goodwill
    
(2,525
)
    
(2,244
)
Total deferred tax liabilities
    
(15,058
)
    
(14,573
)
                 
Net deferred tax asset
  
$
5,620
    
$
2,967
  

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Based on this evaluation as of March 31, 2024, a valuation allowance of $0.1 million was recorded, to offset gross deferred tax assets primarily attributable to net operating losses at certain of the foreign subsidiaries and foreign tax credit carry forwards. We believe that it is more likely than not that we will realize the remaining gross deferred tax assets through generating taxable income or the reversal of existing temporary differences attributable to the gross deferred tax liabilities.