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Income Taxes | 12 Months Ended
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Jun. 30, 2022
Income Taxes |
Income Taxes | NOTE 7 - Income Taxes The provision for income taxes is comprised of the following (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Year ended June 30,
​ |  | 2022 |  | 2021 |  | 2020
Current income taxes: |  | ​ |  |  | ​ |  |  | ​ |
Federal | ​ | $ | 2,161 | ​ | $ | 1,912 | ​ | $ | 1,765
State | ​ |  | 300 | ​ |  | 265 | ​ |  | 418
​ | ​ |  | 2,461 | ​ |  | 2,177 | ​ |  | 2,183
Deferred income tax provision | ​ |  | (214) | ​ |  | 337 | ​ |  | 78
Provision for income taxes | ​ | $ | 2,247 | ​ | $ | 2,514 | ​ | $ | 2,261
​ A reconciliation of the U.S. Federal statutory income tax rate to our actual effective tax rate on earnings before income taxes is as follows for the years ended June 30, (dollars in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2022 | ​ | ​ | 2021 |  | ​ | 2020 |
​ | ​ | ​ | ​ | ​ | % of | ​ | ​ | ​ | ​ | ​ | % of | ​ | ​ | ​ | ​ | ​ | % of | ​
​ | ​ | ​ | ​ | ​ | Pre-tax | ​ | ​ | ​ | ​ | ​ | Pre-tax | ​ | ​ | ​ | ​ | ​ | Pre-tax | ​
​ |  | Amount |  | Income |  | ​ | Amount |  | Income |  | ​ | Amount |  | Income |
Tax at Federal statutory rate | ​ | $ | 4,588 | ​ | 21.0 | % | ​ | $ | 3,765 | ​ | 21.0 | % | ​ | $ | 2,112 | ​ | 21.0 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Increases (decreases) in taxes resulting from: |  | ​ |  |  |  |  | ​ | ​ |  |  |  | ​ | ​ | ​ |  |  |  | ​
Meals and entertainment |  | ​ | 29 |  | 0.1 | % | ​ | ​ | 29 |  | 0.2 | % | ​ | ​ | 44 |  | 0.4 | %
State income taxes, net of Federal income tax benefit |  | ​ | 238 |  | 1.1 | % | ​ | ​ | 135 |  | 0.8 | % | ​ | ​ | 122 |  | 1.2 | %
Foreign source income not subject to tax |  | ​ | (1,534) |  | (7.0) | % | ​ | ​ | (1,647) |  | (9.2) | % | ​ | ​ | (1,089) |  | (10.8) | %
R&D Credit |  | ​ | (554) |  | (2.5) | % | ​ | ​ | (523) |  | (2.9) | % | ​ | ​ | (523) |  | (5.2) | %
Foreign withholding tax |  | ​ | — |  | — | % | ​ | ​ | 205 |  | 1.1 | % | ​ | ​ | — |  | — | %
Non-taxable debt extinguishment |  | ​ | (820) |  | (3.8) | % | ​ | ​ | — |  | — | % | ​ | ​ | — |  | — | %
Uncertain Tax Positions |  | ​ | 20 |  | 0.1 | % | ​ | ​ | 312 |  | 1.7 | % | ​ | ​ | 775 |  | 7.7 | %
IRS examination settlements |  | ​ | — |  | — | % | ​ | ​ | — |  | — | % | ​ | ​ | 832 |  | 8.3 | %
Other, net |  | ​ | 280 |  | 1.3 | % | ​ | ​ | 238 |  | 1.3 | % | ​ | ​ | (12) |  | (0.1) | %
Effective tax rate | ​ | $ | 2,247 |  | 10.3 | % | ​ | $ | 2,514 |  | 14.0 | % | ​ | $ | 2,261 |  | 22.5 | %
​ Deferred tax assets and deferred tax liabilities at June 30, 2022 and 2021 are as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Deferred Tax Assets (Liabilities)
​ |  | 2022 |  | 2021
Accounts receivable | ​ | $ | 42 | ​ | $ | 43
Inventories | ​ |  | 413 | ​ |  | 314
Accrued liabilities | ​ |  | 454 | ​ |  | 374
Stock based compensation expense | ​ |  | 179 | ​ |  | 102
Intangibles | ​ |  | (615) | ​ |  | (454)
Property, plant and equipment | ​ |  | (582) | ​ |  | (539)
Revenue reserves | ​ |  | 466 | ​ |  | 393
Unrealized loss (gain) on marketable securities | ​ | ​ | 90 | ​ | ​ | ​
Other deferred tax liabilities | ​ |  | (613) | ​ |  | (613)
​ | ​ |  | (166) | ​ |  | (380)
Valuation allowance | ​ |  | — | ​ |  | —
Net deferred tax liabilities | ​ | $ | (166) | ​ | $ | (380)
​ The Company has identified the United States and New York State as its major tax jurisdictions. Fiscal year 2018 and forward years are still open for examination. In addition, the Company has a wholly-owned subsidiary which operates in a Free Zone in the Dominican Republic (“DR”) and is exempt from DR income tax. The Company was audited by the IRS for the fiscal year 2016. In July 2019, the Company received Form 4549-A, Income Tax Examination Changes from the IRS proposing an adjustment to income for the fiscal 2016 tax year regarding deemed dividends based on its interpretation of Internal Revenue Code ("IRC") Section 956 arising from the intercompany balances on the books of the Company. In August 2019, the Company filed a formal protest with the IRS requesting an opportunity to appeal the examination findings to the Appeals Office. During fiscal year 2020, the Company settled the issue. There was a provision recorded for the federal and state impact of $762,000 and $70,000, respectively. The Company was audited by the IRS for the fiscal year 2017. The Company received Form 4549-A, Income Tax Examination Changes from the IRS proposing an adjustment to income for the fiscal 2017 tax year regarding deemed dividends based on its interpretation under IRC Section 956 arising from the intercompany balances on the books of the Company. During the third quarter of fiscal 2021, the Company settled the issue and paid the IRS $399,000. The Company reported the results of the IRS exam to all the jurisdictions in which it files and paid taxes and interest totaling $97,000. Subsequent to the quarter end, the Company paid the IRS $68,000 for interest. None of the payments were recorded to expense in 2021, since liabilities had previously been established. The IRS is currently auditing the Company’s Federal income tax return for the tax year ended June 30, 2020. As of June 30, 2022, the IRS has not communicated any material changes to the Company’s previously reported income tax returns and the Company has not established any reserves to uncertain matters as a result of the audit. The provision for income taxes represents Federal, foreign, and state and local income taxes. The effective rate differs from statutory rates due to the effect of tax rates in foreign jurisdictions, state and local income taxes, tax benefit of R&D credits, certain nondeductible expenses, uncertain tax positions, audit settlements and global intangible low-taxed income ("GILTI"). During the year ending June 30, 2022, the Company increased its reserve for uncertain income tax positions by $25,000. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes. As of June 30, 2022, the Company had accrued interest totaling $88,000 and $678,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period. The Company does not expect that its unrecognized tax benefits will significantly change within the next twelve months. The Company claims R&D tax credits on eligible research and development expenditures. The R&D tax credits are recognized as a reduction to income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Tax |  | Interest |  | Total
Balance of gross unrecognized tax benefits as of June 30, 2019 | ​ | $ | 125 | ​ | $ | — | ​ | $ | 125
Increase to unrecognized tax benefits resulting from deemed dividends for investments in US property | ​ | ​ | 682 | ​ | ​ | 83 | ​ | ​ | 765
Increases to unrecognized tax benefits resulting from the generation of additional R&D credits | ​ |  | 59 | ​ |  | — | ​ |  | 59
Balance of gross unrecognized tax benefits as of June 30, 2020 | ​ | $ | 866 | ​ | $ | 83 | ​ | $ | 949
Decrease to unrecognized tax benefits from deemed dividends for investments in US property | ​ | ​ | (3) | ​ |  | (20) | ​ |  | (23)
Decrease to unrecognized tax benefits resulting from the release of R&D credits due to the settled IRS audit | ​ |  | (185) | ​ |  | — | ​ |  | (185)
Balance of gross unrecognized tax benefits as of June 30, 2021 | ​ | $ | 678 | ​ | $ | 63 | ​ | $ | 741
Increase to unrecognized tax benefits from deemed dividends for investments in US property | ​ |  | — | ​ |  | 25 | ​ |  | 25
Balance of gross unrecognized tax benefits as of June 30, 2022 | ​ | $ | 678 | ​ | $ | 88 | ​ | $ | 766
​ The Company plans to permanently reinvest a substantial portion of its foreign earnings and as such has not provided withholding tax on the permanently reinvested earnings. The Company has accrued $613,000 for withholding taxes on undistributed earnings that are not permanently reinvested. As of June 30, 2022, the Company had approximately $71.6 million of undistributed earnings of foreign subsidiaries.

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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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://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 https://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 https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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