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Income Taxes
 3 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of (loss) income before income taxes from continuing operations are as follows (dollars in thousands):
 Three Months Ended December 31,
20212020
Domestic$(58,889)$(4,995)
Foreign24,880 14,252 
(Loss) income before income taxes$(34,009)$9,257 
The components of provision for income taxes from continuing operations are as follows (dollars in thousands):
 Three Months Ended December 31,
20212020
Domestic$21,229 $(2,892)
Foreign2,321 5,195 
Provision for income taxes$23,550 $2,303 
Effective tax rate(69.2)%24.9 %
The effective income tax rate is based upon the income for the year, the geographic mix of our income, the composition of the income in different countries, changes relating to valuation allowances and the potential tax consequences of resolving audits or other tax contingencies.
Our effective income tax rate was (69.2)% for the three months ended December 31, 2021, compared to 24.9% for the three months ended December 31, 2020. The effective tax rate for the three months ended December 31, 2021 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax, the composition of the mix in income in different countries, offset by the change in valuation allowance. The effective tax rate for the three months ended December 31, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax offset by a change in the valuation allowance in the United States.
On October 8, 2021, we received an interim decision from the Administrative Court of the Canton of Zurich in Switzerland (the “Swiss Appeals Court”) regarding our appeal of certain proposed income tax adjustments related to a 2011 IP transfer and business restructuring by a Swiss subsidiary. Although the Swiss Appeals Court upheld a tax assessment related to the IP
transfer, it remanded our case to a lower court in Switzerland for further factual development and consideration of other issues. As of the quarter ending December 31, 2021, the lower court proceeding has not commenced. We currently believe it is reasonably possible that the case could be resolved in the next 12 months. We disagree with the tax authorities' position and intend to vigorously defend our position in the lower court proceedings. If we prevail, there would be no incremental financial exposure; however, if the position of the Swiss tax authorities is ultimately upheld on all matters, we could be required to pay up to $60 million, the majority of which could affect our earnings.
Valuation Allowances
As of December 31, 2021 and September 30, 2021, we had a full valuation allowance against net domestic deferred tax assets and certain foreign deferred tax assets. We intend to maintain valuation allowances on these deferred tax assets until there is sufficient evidence to support the release of all or some portion of these allowances. A significant portion of our domestic deferred tax assets relate to U.S. net operating losses. We continue to believe negative evidence for the release of some or all of the allowances outweighs positive evidence after considering recent profitability trends and the disposition of the medical transcription and EHR implementation businesses. We continue to evaluate all sources of domestic taxable income including both the reversal of existing deferred tax liabilities and the likelihood that we could sustain pretax profitability in the future. As of December 31, 2021, we believe that there is a reasonable possibility that within the next twelve months these sources of taxable income may become sufficient positive evidence to support a conclusion that a substantial portion of the domestic valuation allowance, excluding capital losses, could be released.