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Income Taxes
6 Months Ended
Mar. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
Note 12—Income Taxes
The effective income tax rates were 17% for the three and six months ended March 31, 2021, and 19% for the three and six months ended March 31, 2020. The decrease in the effective tax rate was primarily due to $66 million and $147 million of tax benefits recognized during the three and six months ended March 31, 2021, respectively, as a result of the conclusion of audits by taxing authorities.
During the three and six months ended March 31, 2021, the Company’s gross unrecognized tax benefits decreased by $111 million and $117 million, respectively, and the Company’s net unrecognized tax benefits decreased by $127 million and $176 million, respectively. The decrease in unrecognized tax benefits is primarily due to the recognition of previously unrecognized tax benefits as a result of the conclusion of audits by taxing authorities, partially offset by increases in gross timing differences as well as various tax positions across several jurisdictions. During the three and six months ended March 31, 2021 and 2020, there were no significant changes in accrued interest and penalties related to uncertain tax positions.
The Company’s tax filings are subject to examination by U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.
In September 2020, the Company accepted a settlement offer related to the examination of Canadian tax returns dating back to fiscal 2003, which was subject to approval by the Tax Court of Canada. On January 21, 2021, the Tax Court of Canada approved the settlement agreement related to the examination. The Company’s income tax provision was adjusted to reflect the estimated impact of the settlement in fiscal 2020.
The American Rescue Plan Act of 2021 (the “ARP Act”) was enacted in the U.S. on March 11, 2021. The ARP Act is not expected to have a material impact on the Company’s financial results.