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Income Taxes | 12 Months Ended
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Sep. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 11: INCOME TAXES The following table presents the components of our income from continuing operations before income taxes, including inter-segment amounts:
| Fiscal Year Ended September 30,
(in thousands) | 2021 |  | 2020 |  | 2019
Domestic* | $ | 2,320 |  |  | $ | (31,989) |  |  | $ | (9,609) |
Foreign | 13,742 |  |  | (38,106) |  |  | 13,783 |
| $ | 16,062 |  |  | $ | (70,095) |  |  | $ | 4,174 |
* Includes the majority of our corporate administrative costs. See Note 14: Segment Information for information pertaining to segment contribution. The following table presents the significant components of the income tax provision:
| Fiscal Year Ended September 30,
(in thousands) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | (479) |  |  | $ | (6,631) |  |  | $ | 431 |
State and foreign | 4,646 |  |  | 10,544 |  |  | 704 |
| 4,167 |  |  | 3,913 |  |  | 1,135 |
Deferred: |  |  |  |  |
Federal | 3,202 |  |  | (1,561) |  |  | (4,264) |
State and foreign | 81 |  |  | (3,984) |  |  | 5,535 |
| 3,283 |  |  | (5,545) |  |  | 1,271 |
Total income tax (benefit) expense | $ | 7,450 |  |  | $ | (1,632) |  |  | $ | 2,406 |
The following table presents a reconciliation of income taxes calculated at the statutory rate and the provision for income taxes:
| Fiscal Year Ended September 30,
(in thousands) | 2021 |  | 2020 |  | 2019
Income tax expense (benefit) at the federal statutory rate | $ | 3,374 |  |  | $ | (14,720) |  |  | $ | 878 |
State taxes, net of federal benefit | 931 |  |  | 951 |  |  | 184 |
Mexico inflation adjustment | (1,217) |  |  | (1,120) |  |  | (801) |
Non-deductible items | 2,087 |  |  | 772 |  |  | 2,088 |
Tax credits | — |  |  | — |  |  | (551) |
Foreign rate differential | 1,111 |  |  | (1,671) |  |  | 1,080 |
Change in valuation allowance | (137) |  |  | 962 |  |  | 1,601 |
Stock compensation | 293 |  |  | 598 |  |  | (711) |
Uncertain tax positions | 208 |  |  | 2,849 |  |  | (1,596) |
Non-deductible impairment | — |  |  | 9,093 |  |  | — |
Deferred tax true-up | 896 |  |  | — |  |  | — |
Other | (96) |  |  | 654 |  |  | 234 |
Total income tax expense (benefit) | $ | 7,450 |  |  | $ | (1,632) |  |  | $ | 2,406 |
Effective tax rate | 46 | % |  | 2 | % |  | 58 | %
The following table shows significant components of our deferred tax assets and liabilities:
| September 30,
(in thousands) | 2021 |  | 2020
Deferred tax assets: |  |  |
Cash Converters | $ | 13,848 |  |  | $ | 15,049 |
Tax over book inventory | 7,595 |  |  | 9,737 |
Accrued liabilities | 7,731 |  |  | 8,924 |
Pawn service charges receivable | 1,195 |  |  | 1,019 |
Stock compensation | 643 |  |  | 1,565 |
Foreign tax credit | 2,484 |  |  | 1,696 |
State and foreign net operating loss carryforwards | 19,414 |  |  | 15,990 |
Book over tax depreciation | 7,250 |  |  | 4,651 |
Other | 3,562 |  |  | 4,350 |
Total deferred tax assets before valuation allowance | 63,722 |  |  | 62,981 |
Valuation allowance | (19,135) |  |  | (18,524) |
Total deferred tax assets, net | 44,587 |  |  | 44,457 |
Deferred tax liabilities: |  |  |
Tax over book amortization | 23,674 |  |  | 22,444 |
Note receivable discount | 13,483 |  |  | 12,257 |
Prepaid expenses | 1,368 |  |  | 1,349 |
Total deferred tax liabilities | 38,525 |  |  | 36,050 |
Net deferred tax asset | $ | 6,062 |  |  | $ | 8,407 |
As of September 30, 2021, we had federal and state net operating loss carryforwards of approximately $100.6 million, which begin to expire in 2022 if not utilized. We also had foreign net operating loss carryforwards of $56.9 million, which will begin to expire in 2030 if not utilized. Additionally, we have a $1.7 million foreign tax credit that will expire between 2024 to 2027 if not utilized. Deferred tax assets and liabilities are recorded for the estimated tax impact of temporary differences between the tax basis and book basis of assets and liabilities. The Company has elected to account for the tax on Global Intangible Low-Taxed Income (“GILTI”) as a period cost and therefore has not recorded deferred taxes related to GILTI on its foreign subsidiaries. A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized. Our valuation allowance has been established to offset certain state and foreign net operating loss carryforwards and foreign tax credit carryforwards that are not more likely than not to be utilized prior to expiration. The valuation allowance increased by $0.6 million in fiscal 2021, primarily due to the recording of a valuation allowance for losses generated during the year in certain foreign jurisdictions which we believe are not more likely than not to be utilized. We believe our results from future operations will generate sufficient taxable income in the appropriate jurisdictions such that it is more likely than not that the remaining deferred tax assets will be realized. Deferred taxes are not provided for undistributed earnings of foreign subsidiaries of approximately $70.0 million which are intended to be reinvested outside of the U.S. Accordingly, no provision for foreign withholding taxes associated with a distribution of those earnings has been made. We estimate that, upon distribution of our share of these earnings, we would be subject to withholding taxes of approximately $3.8 million as of September 30, 2021. We provided deferred income taxes on all undistributed earnings from Cash Converters. The following table presents a roll-forward of unrecognized tax benefits:
| Fiscal Year Ended September 30,
(in thousands) | 2021 |  | 2020 |  | 2019
Beginning balance | $ | 3,085 |  |  | $ | 1,435 |  |  | $ | 3,091 |
Increase for tax positions taken during a prior period | 2,135 |  |  | 1,401 |  |  | — |
Increase for tax positions taken during the current period | — |  |  | 249 |  |  | — |
Decrease for tax positions as a result of the lapse of the statute of limitations | (457) |  |  | — |  |  | (1,656) |
Ending balance | $ | 4,763 |  |  | $ | 3,085 |  |  | $ | 1,435 |
All of the above unrecognized tax benefits, if recognized, would impact our effective tax rate for the respective period of each ending balance. The statute of limitations will expire within the next twelve months with respect to approximately $2.2 million of foreign uncertain tax positions. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During 2021, 2020, and 2019, the Company recognized income tax expense consisting of interest and penalties of $0.3 million, $1.2 million, and $0.2 million, respectively, due to the accrual of current year interest and penalties on existing positions offset by the reversal of previous accruals due to the lapse of the statute of limitations. The total amount of accrued interest and penalties was $1.8 million, $1.5 million and $0.3 million in 2021, 2020 and 2019, respectively. We are subject to U.S., Mexico, Canada, Guatemala, Honduras, El Salvador, Peru and the Netherlands income taxes as well as income taxes levied by various state and local jurisdictions. With few exceptions, we are no longer subject to examinations by tax authorities for years before the tax year ended September 30, 2014. We believe that adequate provisions have been made for any adjustments that may result from tax examinations.

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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=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 http://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 http://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 http://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 http://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 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 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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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