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Income Taxes
9 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes

10. Income Taxes

 

Income tax expense was $1.9 million and $5.2 million for the three and nine months ended June 30, 2017, respectively, compared with $2.0 million and $3.6 million for the three and nine months ended June 30, 2016, respectively. The effective income tax rate for the nine months ended June 30, 2017 was 33.3% compared with 26.0% for the comparable period in the prior year. Our effective tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tax credit.

 

The Company or one of its subsidiaries files income tax returns for U.S. federal, and various state and local jurisdictions. The Company is no longer subject to federal, state and local income tax examinations by tax authorities for years before 2013. The Company’s federal income tax returns for the fiscal years ended September 30, 2015, 2014 and 2013 are currently under examination by the Internal Revenue Service.

 

The Company accounts for uncertain tax positions pursuant to ASC Topic 740, Income Taxes. As of June 30, 2017 and September 30, 2016, the liability for uncertain tax positions totaled approximately $437,000 and $1.0 million, respectively, which is included in current liabilities on our condensed consolidated balance sheets, and is open to further evaluation. During the three and nine months ended June 30, 2017, the Company settled a city tax audit for approximately $0 and $0.6 million, respectively, the amount previously recorded as an uncertain tax position. This settlement did not have an impact on the annual effective tax rate. The Company recognizes interest accrued related to uncertain tax positions in interest expense and penalties in operating expenses.