INCOME TAXES

3 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

As of June 30, 2020 and March 31, 2020, the Company had $5.9 million and $5.8 million, respectively, of total gross unrecognized tax benefits including interest.  Approximately $5.3 million and $5.2 million, respectively, represent the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. At June 30, 2020, approximately $2.9 million of gross unrecognized tax benefits are expected to be resolved during the next twelve months through the expiration of the statute of limitations and settlement with taxing authorities. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense.  As of June 30, 2020, the Company had approximately $1.5 million accrued for gross interest, of which $77.2 thousand was accrued during the three months ended June 30, 2020.

The Company is subject to U.S. income taxes, as well as various other state and local jurisdictions.  With the exception of a few states, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016, although carryforward attributes that were generated prior to 2016 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period.  

The Company’s effective income tax rate increased to 26.3% for the quarter ended June 30, 2020 compared to 21.5% for the prior year quarter. The increase is primarily due to lower than estimated Federal Historic Tax Credits for fiscal 2020 with the correction being treated as a discrete event in the current year quarter and a reduction in the permanent tax benefit related to the exercise of non-qualified stock options when compared to the prior year quarter.