Income Taxes

9 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 12—Income Taxes

For the three and nine months ended June 30, 2024, the effective income tax rates were 19% and 18%, respectively, and for the three and nine months ended June 30, 2023, the effective income tax rates were 19% and 18%, respectively. The effective income tax rates differ primarily due to the following:

•During the nine months ended June 30, 2024, a $184 million tax benefit as a result of the conclusion of an audit; and

•During the nine months ended June 30, 2023, a $142 million tax benefit due to the reassessment of an uncertain tax position as a result of new information obtained during an ongoing tax examination.

During the three and nine months ended June 30, 2024, the Company’s gross unrecognized tax benefits increased by $219 million and $215 million, respectively, and the Company’s net unrecognized tax benefits increased by $29 million and decreased by $101 million, respectively. The change in unrecognized tax benefits is related to various tax positions across several jurisdictions, including an increase in gross timing differences. Additionally, the nine months ended June 30, 2024 included the recognition of previously unrecognized tax benefits as a result of the conclusion of an audit. During the three and nine months ended June 30, 2024, the Company’s accrued interest related to uncertain tax positions increased by $18 million and decreased by $33 million, respectively. During the three and nine months ended June 30, 2023, there were no significant changes in accrued interest related to uncertain tax positions.

The Company has an unresolved issue with the Internal Revenue Service (IRS) related to certain income tax deductions for fiscal years 2008 through 2015. In June 2024, the Company filed a complaint with the U.S. Court of Federal Claims challenging the position of the IRS. See further discussion in Note 13—Legal Matters.

In January 2024, a resolution was reached regarding India tax assessments for taxable years falling within the period from 2010 to 2019. As a result, the Company withdrew its appeals to the appellate authorities for these years.

Effective through September 30, 2028, the Company’s operating hub in the Asia Pacific region is subject to a tax incentive in Singapore which is conditional upon meeting certain requirements.

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 and refund claims are uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next 12 months.