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Income Taxes | 12 Months Ended
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Mar. 31, 2022
Income Taxes [Abstract] |
Income Taxes | 16. Income Taxes The income tax expense (benefit) is as follows:
|  | Years Ended March 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current tax expense |  |  |  |  |  |  |  |  |
Federal |  | $ | 8,572,000 |  |  | $ | 5,734,000 |  |  | $ | 5,313,000 |
State |  |  | 1,478,000 |  |  |  | 722,000 |  |  |  | 1,454,000 |
Foreign |  |  | 3,180,000 |  |  |  | 3,364,000 |  |  |  | 1,566,000 |
Total current tax expense |  |  | 13,230,000 |  |  |  | 9,820,000 |  |  |  | 8,333,000 |
Deferred tax (benefit) expense |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (6,411,000 | ) |  |  | (1,909,000 | ) |  |  | (4,516,000 | )
State |  |  | (659,000 | ) |  |  | 118,000 |  |  |  | (1,567,000 | )
Foreign |  |  | (372,000 | ) |  |  | 1,358,000 |  |  |  | (3,261,000 | )
Total deferred tax benefit |  |  | (7,442,000 | ) |  |  | (433,000 | ) |  |  | (9,344,000 | )
Total income tax expense (benefit) |  | $ | 5,788,000 |  |  | $ | 9,387,000 |  |  | $ | (1,011,000 | )
Deferred income taxes consist of the following:
|  | March 31, 2022 |  |  | March 31, 2021 |
Assets |  |  |  |  |  |
Allowance for bad debts |  | $ | 99,000 |  |  | $ | 85,000 |
Customer allowances earned |  |  | 5,321,000 |  |  |  | 4,135,000 |
Allowance for stock adjustment returns |  |  | 1,651,000 |  |  |  | 3,086,000 |
Inventory adjustments |  |  | 3,815,000 |  |  |  | 4,323,000 |
Stock options |  |  | 2,984,000 |  |  |  | 2,562,000 |
Operating lease liabilities |  |  | 23,894,000 |  |  |  | 21,595,000 |
Estimate for returns |  |  | 25,445,000 |  |  |  | 16,479,000 |
Accrued compensation |  |  | 3,515,000 |  |  |  | 2,362,000 |
Net operating losses |  |  | 4,617,000 |  |  |  | 4,210,000 |
Tax credits |  |  | 2,018,000 |  |  |  | 1,828,000 |
Other |  |  | 3,833,000 |  |  |  | 3,003,000 |
Total deferred tax assets |  | $ | 77,192,000 |  |  | $ | 63,668,000 |
Liabilities |  |  |  |  |  |  |  |
Plant and equipment, net |  |  | (1,051,000 | ) |  |  | (2,083,000 | )
Intangibles, net |  |  | (13,088,000 | ) |  |  | (9,840,000 | )
Operating lease |  |  | (23,421,000 | ) |  |  | (20,950,000 | )
Other |  |  | (5,960,000 | ) |  |  | (5,324,000 | )
Total deferred tax liabilities |  | $ | (43,520,000 | ) |  | $ | (38,197,000 | )
Less valuation allowance |  | $ | (6,816,000 | ) |  | $ | (6,163,000 | )
Total |  | $ | 26,856,000 |  |  | $ | 19,308,000 |
As of March 31, 2022, the Company had federal net operating loss carryforwards of $789,000 related to its January 2019 acquisition, state net operating loss carryforwards of $537,000 and foreign net operating loss carryforwards of $16,709,000. The federal net operating loss carryforwards expire beginning in fiscal year 2033, the state net operating loss carryforwards expire beginning in fiscal year 2033, and the foreign net operating loss carryforwards expire beginning in fiscal year 2038. As of March 31, 2022, the Company also had non-US tax credit carryforwards of $2,018,000, which will expire beginning in fiscal year 2034. A full valuation allowance was established on the federal and foreign net operating loss and tax credits carryforward as the Company believes it is more likely than not these tax attributes would not be realizable in the future. The net increase in the valuation allowance was $653,000 during the year ended March 31, 2022. Realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient future taxable income. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the Company’s net deferred tax assets. The Company makes these estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s future plans. A valuation allowance is established when the Company believes it is not more likely than not all or some deferred tax assets will be realized. In evaluating the Company’s ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence. Deferred tax assets arising primarily as a result of non-US net operating loss carry-forwards and non-US research and development credits in connection with the Company’s Canadian operations have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Should the actual amount differ from the Company’s estimates, the amount of the valuation allowance could be impacted. For the years ended March 31, 2022, 2021, and 2020, the primary components of the Company’s income tax expense were (i) federal income taxes, (ii) state income taxes, (iii) foreign income taxed at rates that are different from the federal statutory rate, (iv) change in realizable deferred tax items, (v) impact of the non-deductible executive compensation under Internal Revenue Code Section 162(m), and (vi) income taxes associated with uncertain tax positions The difference between the income tax expense at the federal statutory rate and the Company’s effective tax rate is as follows:
|  | Years Ended March 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Statutory federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State income tax rate, net of federal benefit |  |  | 4.1 | % |  |  | 2.2 | % |  |  | (3.7 | )%
Excess tax benefit from stock compensation |  |  | (0.4 | )% |  |  | 0.5 | % |  |  | (1.3 | )%
Foreign income taxed at different rates |  |  | 4.9 | % |  |  | 1.9 | % |  |  | 13.8 | %
Return to provision adjustments |  |  | (0.9 | )% |  |  | 0.4 | % |  |  | (1.5 | )%
Non-deductible executive compensation |  |  | 7.2 | % |  |  | 1.9 | % |  |  | (4.0 | )%
Change in valuation allowance |  |  | 5.0 | % |  |  | 2.2 | % |  |  | (18.7 | )%
Net operating loss carryback |  |  | (0.4 | )% |  |  | - | % |  |  | 4.8 | %
Uncertain tax positions |  |  | 6.1 | % |  |  | 0.3 | % |  |  | 2.1 | %
Research and development credit |  |  | (0.9 | )% |  |  | (0.3 | )% |  |  | 1.1 | %
Other income tax |  |  | (1.7 | )% |  |  | 0.3 | % |  |  | (1.4 | )%
|  |  | 44.0 | % |  |  | 30.4 | % |  |  | 12.2 | %
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions with varying statutes of limitations. At March 31, 2022, the Company is not under examination in any jurisdiction and the years ended March 31, 2017 through 2022 remain subject to examination. The Company believes no significant changes in the unrecognized tax benefits will occur within the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Years Ended March 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Balance at beginning of period |  | $ | 1,104,000 |  |  | $ | 1,011,000 |  |  | $ | 1,083,000 |
Additions based on tax positions related to the current year |  |  | 352,000 |  |  |  | 249,000 |  |  |  | 362,000 |
Additions for tax positions of prior year |  |  | 581,000 |  |  |  | 67,000 |  |  |  | - |
Reductions for tax positions of prior year |  |  | (62,000 | ) |  |  | (223,000 | ) |  |  | (434,000 | )
Balance at end of period |  | $ | 1,975,000 |  |  | $ | 1,104,000 |  |  | $ | 1,011,000 |
At March 31, 2022, 2021 and 2020, there are $1,632,000, $923,000, and $823,000, respectively, of unrecognized tax benefits that if recognized would affect the annual effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as part of income tax expense. During the years ended March 31, 2022, 2021, and 2020, the Company recognized interest and penalties of approximately $112,000, $(16,000), and $(50,000), respectively. The Company had approximately $170,000 and $58,000 for the payment of interest and penalties accrued at March 31, 2022 and 2021, respectively. With the exception of its earnings from its Singapore subsidiary, the Company intends to indefinitely reinvest its undistributed earnings from foreign subsidiaries in foreign operations. No incremental U.S. Federal tax or withholding taxes have been provided for these earnings.

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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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