Income and Other Taxes

3 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income and Other Taxes

NOTE 12.            Income and Other Taxes

For the three months ended December 31, 2019 and 2018, the Company recorded income tax expense of approximately $14,000 and $15,000, respectively. Income tax expense for the three months ended December 31, 2019 and 2018 is primarily comprised of state minimum tax expense.

For the three months ended December 31, 2019 and 2018, the effective tax rate on continuing operations was 0.0% and 0.1%, respectively. The lower tax rate for the three months ended December 31, 2019 is primarily due to the state minimum tax expense. The higher tax rate for the three months ended December 31, 2018 is primarily due to the operating loss and state minimum tax expense. Income tax expense is comprised of estimated alternative minimum tax and foreign tax expense. The Company uses some estimates to forecast permanent differences between book and tax accounting.

We have not provided for income taxes on non-U.S. subsidiaries’ undistributed earnings as of December 31, 2019 because we plan to indefinitely reinvest the unremitted earnings of our non-U.S. subsidiaries and all of our non-U.S. subsidiaries historically have negative earnings and profits.

All deferred tax assets have a full valuation allowance at December 31, 2019. On a quarterly basis, the Company evaluates the positive and negative evidence to assess whether the more likely than not criteria has been satisfied in determining whether there will be further adjustments to the valuation allowance.

During the three months ended December 31, 2019 and 2018, there were no material increases or decreases in unrecognized tax benefits. As of December 31, 2019 and September 30, 2019, we had approximately $0.5 million of interest and penalties accrued as tax liabilities on our balance sheet. We believe that it is reasonably possible that none of the uncertain tax positions will be paid or settled within the next 12 months. Interest that is accrued on tax liabilities is recorded within interest expense on the condensed consolidated statements of operations.