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INCOME TAXES
 12 Months Ended
Mar. 27, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 4 – INCOME TAXES

While the Tax Cuts and Jobs Act of 2017 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 these provisions in the period in which incurred. During fiscal years 2021 and 2020, the Company recorded net income tax benefits of less than $0.1 million each year as a result of these provisions. Foreign subsidiary’s undistributed earnings are considered to be permanently reinvested.

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

FY 2021

FY 2020

United States

$

9,187

$

8,783

Foreign

795

947

Total

$

9,982

$

9,730

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The provision for income taxes for fiscal years 2021 and 2020 is as follows:

FY 2021

FY 2020

Current Tax Provision:

Federal

$

1,449

$

630

State

428

285

Foreign

103

329

$

1,980

$

1,244

Deferred Tax (Benefit) Provision:

Federal

$

96

$

371

State

(22

)

77

Foreign

137

(29

)

$

211

$

419

Provision for Income Taxes

$

2,191

$

1,663

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 2021

FY 2020

Federal Income Tax at Statutory Rate

$

2,096

$

2,044

State Income Taxes, net of federal benefit

282

294

Foreign Taxes and Federal, State and Foreign Tax Credits

9

(97

)

Tax Impact of Equity Awards

(274

)

(876

)

Other, net

78

298

Total

$

2,191

$

1,663

 

March 27,

March 28,

2021

2020

Deferred Tax Assets:

Accrued Liabilities

$

354

$

531

Lease Liabilities

2,439

2,253

Performance-Based Stock Award Grants

439

432

Inventory Reserves

132

105

Non-Qualified Deferred Compensation Plan

104

98

Post-Retirement Health Care Plans

506

385

Stock-Based Compensation

95

70

Deferred Payroll Tax – CARES Act

259

-

Capitalized Inventory Costs

118

126

Other

267

265

Total Deferred Tax Assets

$

4,713

$

4,265

 

Deferred Tax Liabilities:

Goodwill and Intangible Assets

$

(1,233

)

$

(1,162

)

Right of Use Assets

(2,408

)

(2,198

)

Depreciation

(4,230

)

(3,858

)

Other

(43

)

(72

)

Total Deferred Tax Liabilities

$

(7,914

)

$

(7,290

)

 

Net Deferred Tax Liabilities

$

(3,201

)

$

(3,025

)

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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 2017 and prior, by state tax authorities for fiscal years 2015 and prior, and by Canadian tax authorities for fiscal years 2014 and prior. There are no income tax years currently under examination by Canadian or state income tax authorities. The fiscal year ended March 31, 2018 is currently under examination by the Internal Revenue Service. A reserve of less than $0.1 million was recorded during the fiscal year ended March 27, 2021 relating to this examination.

During fiscal years 2021 and 2020, there were no uncertain tax positions. No interest or penalties related to uncertain tax positions were recognized in fiscal years 2021 and 2020 or were accrued at March 27, 2021 and March 28, 2020.

The Company’s effective tax rate for fiscal years 2021 and 2020 was 21.9% and 17.1%, respectively. The 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 2021 and 2020 were $0.3 and $0.9 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 2022. As such, it expects its effective tax rate in fiscal year 2022 to be between 20.0% and 22.0%.