INCOME TAXES

3 Months Ended

Dec. 28, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

At the end of each reporting period, TD Group makes an estimate of its annual effective income tax rate. The estimate used in the year-to-date period may change in subsequent periods. During the thirteen week periods ended December 28, 2019 and December 29, 2018, the effective income tax rate was 20.1% and 21.5%, respectively. The Company's lower

effective tax rate for the thirteen week period ended December 28, 2019 was primarily due to a discrete benefit recognized for excess tax benefits for share-based payments during the thirteen week period ended December 28, 2019, partially offset by an increase in the valuation allowance associated with our net interest expense limitation under IRC Section 163(j). The Company's effective tax rate for the thirteen week period ended December 28, 2019 was lower than the Federal statutory rate of 21% primarily due to the discrete benefit recognized for excess tax benefits for share-based payments and the benefit associated with the deduction for foreign-derived intangible income (FDII), partially offset by the increase in the valuation allowance attributed to our net interest expense limitation under IRC Section 163(j), and our foreign earnings taxed at rates higher than the U.S. statutory rate. The Company’s effective tax rate for the thirteen week period ended December 29, 2018 was slightly higher than the Federal statutory tax rate primarily resulting from the valuation allowance associated with our net interest expense limitation under IRC Section 163(j), foreign earnings taxed at rates higher than the U.S. statutory rate, partially offset by the benefit associated with FDII.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Company is currently under examination for its federal income taxes in the U.S. for fiscal 2016, in Belgium for fiscal years 2016 through 2018, in Canada for fiscal years 2013 through 2015, in France for fiscal years 2015 through 2018, and in Germany for fiscal years 2014 through 2017. The Company is no longer subject to U.S. federal examinations for years before fiscal year 2015. The Company is subject to state income tax examinations for fiscal years 2009 and later.

At December 28, 2019 and September 30, 2019, TD Group had $36.6 million and $36.5 million, respectively, in unrecognized tax benefits, the recognition of which would have an effect of approximately $31.9 million and $31.4 million on the effective tax rate at December 28, 2019 and September 30, 2019, respectively. The Company believes the tax positions that comprise the unrecognized tax benefits will be reduced by approximately $1.5 million over the next 12 months. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.