On December 22, 2017, the Tax Act was signed into law. The Tax Act includes numerous changes to existing tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%. Since the Company is a fiscal year taxpayer, the lower corporate income tax rate was effective for fiscal years 2020 and 2019. The Tax Act also caused the Company’s U.S. deferred tax assets and liabilities to be remeasured as of March 31, 2018 based on the rates at which they are expected to reverse, which is generally 21% plus the applicable state rates.

In addition, the Tax Act provided for a one-time “deemed repatriation” of accumulated foreign earnings for post-1986 undistributed foreign subsidiary earnings and profits through fiscal year 2018. The Company finalized the additional provision for income tax expense on the deemed repatriation at less than $0.1 million with the filing of its fiscal year 2018 U.S. federal income tax return. No additional provision for U.S. federal or foreign taxes has been made as the foreign subsidiary’s undistributed earnings are considered to be permanently reinvested. It is not practicable to determine the amount of other taxes that would be payable if these amounts were repatriated to the U.S.

While the Tax Act provides for a territorial tax system, effective for tax years beginning after December 31, 2017, it includes the Global Intangible Low-Taxed Income (“GILTI”) and Foreign Derived Intangible Income (“FDII”) provisions. The Company has elected to account for the GILTI tax in the period in which it is incurred. During fiscal years 2020 and 2019, the Company recorded net income tax benefits of less than $0.1 million each year as a result of these provisions.

Transcat’s income before income taxes on the Consolidated Statements of Income is as follows:

	FY 2020			FY 2019
Current Tax Provision:
Federal	$	630		$	701
State		285			349
Foreign		329			259
	$	1,244		$	1,309
Deferred Tax (Benefit) Provision:
Federal	$	371		$	926
State		77			(63	)
Foreign		(29	)		(82	)
	$	419		$	781
Provision for Income Taxes	$	1,663		$	2,090

A reconciliation of the income tax provision computed by applying the statutory U.S. federal income tax rate and the income tax provision reflected in the Consolidated Statements of Income is as follows:

	FY 2020			FY 2019
Federal Income Tax at Statutory Rate	$	2,044		$	1,939
State Income Taxes, net of federal benefit		294			213
Research and Development Credits		(97	)		(70	)
Tax Impact of Equity Awards		(876	)		(78	)
Other, net		298			86
Total	$	1,663		$	2,090

	March 28,			March 30,
	2020			2019
Deferred Tax Assets:
Accrued Liabilities	$	531		$	285
Lease Liabilities		2,253			-
Performance-Based Stock Award Grants		432			503
Inventory Reserves		105			98
Non-Qualified Deferred Compensation Plan		98			121
Post-Retirement Health Care Plans		385			334
Stock-Based Compensation		70			192
Capitalized Inventory Costs		126			126
Other		265			217
Total Deferred Tax Assets	$	4,265		$	1,876

Deferred Tax Liabilities:
Goodwill and Intangible Assets	$	(1,162	)	$	(1,087	)
Right of Use Assets		(2,198	)		-
Depreciation		(3,858	)		(3,196	)
Other		(72	)		(43	)
Total Deferred Tax Liabilities	$	(7,290	)	$	(4,326	)

Net Deferred Tax Liabilities	$	(3,025	)	$	(2,450	)

The Company files income tax returns in the U.S. federal jurisdiction, various states and Canada. The Company is no longer subject to examination by U.S. federal income tax authorities for fiscal years 2016 and prior, by state tax authorities for fiscal years 2014 and prior, and by Canadian tax authorities for fiscal years 2013 and prior. There are no income tax years currently under examination by U.S. federal, or state income tax authorities. The examination of the Company’s Scientific Research and Experimental Development credit reflected on its Canadian corporation income tax return for the period ended March 31, 2018 was concluded in fiscal year 2020, resulting in an assessment of less than $0.1 million.

During fiscal years 2020 and 2019, there were no uncertain tax positions. No interest or penalties related to uncertain tax positions were recognized in fiscal years 2020 and 2019 or were accrued at March 28, 2020 and March 30, 2019.

The Company’s effective tax rate for fiscal years 2020 and 2019 was 17.1% and 22.6%, respectively. Its tax rate is affected by recurring items, such as state income taxes and tax credits, which the Company expects to be fairly consistent in the near term. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. The discrete benefits related to share-based compensation awards in each of fiscal years 2020 and 2019 were $0.9 and $0.1 million, respectively.

The Company expects to receive certain federal, state and Canadian tax credits in future years. The Company also expects to receive discrete tax benefits related to share-based compensation awards in fiscal year 2021. As such, it expects its effective tax rate in fiscal year 2021 to be between 24.0% and 25.0%.