Income Taxes

9 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 5. Income Taxes

Income tax expense was estimated at $224,000 and $576,000 and the effective tax rate was 25.8% and 23.1% for the three and nine months ended March 31, 2022, respectively. Estimated income tax expense for the three and nine months ended March 31, 2022 includes a discrete tax benefit of $22,000 and $43,000, respectively, related to the exercise of stock options and other items.

Income tax expense was estimated at $29,000 and $555,000 and the effective tax rate was 11.5% and 22.0% for the three and nine months ended March 31, 2021, respectively. Estimated income tax expense for the three months ended March 31, 2021 included a discrete tax benefit of $37,000 as a result of lower federal and state taxes than what was originally estimated in the Company’s tax provision for its fiscal year ended June 30, 2020. Estimated income tax expense for the nine months ended March 31, 2021 included such $37,000 discrete tax benefit as well as a $32,000 discrete tax benefit related to the exercise of stock options. The net impact of these discrete events decreased the estimated effective tax rates by 2.7% during the nine months ended March 31, 2021.

The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended 2019 are no longer open to U.S. federal, state or local examinations by taxing authorities. The Company is currently under examination by the Internal Revenue Service (the “IRS”) for the fiscal year ended June 30, 2020. To date, the IRS is continuing its examination process and no formal assessments have been issued. The Company is not under any current income tax examinations by any other state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.