Income Taxes

3 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s year-to-date effective income tax rate at September 30, 2021 was 18% compared to an effective tax rate of 22% for the same period in 2020. The variations between the Company’s effective tax rate and the U.S. statutory rate of 21% were primarily due to tax rate differentials between U.S. and foreign jurisdictions.

U.S. GAAP prescribes the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements which includes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of September 30, 2021 and June 30, 2021, the Company’s gross unrecognized income tax benefit, excluding interest and penalties, was $38 million for both periods. The Company has classified the uncertain tax positions as non-current income tax liabilities, as the amounts are not expected to be paid within one year. If recognized, $33 million of the gross unrecognized tax benefits at September 30, 2021 would impact the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in the income tax provision in the Condensed Consolidated Statements of Earnings. The amount of accrued interest and penalties included in the gross unrecognized income tax benefit was $3 million at both September 30, 2021 and June 30, 2021. Fiscal years 2018 to 2021 remain open to examination by the Internal Revenue Service, fiscal years 2017 to 2021 remain open to examination by certain state jurisdictions, and fiscal years 2011 to 2021 remain open to examination by certain foreign taxing jurisdictions. The Company is currently under examination in New York for the years ended June 30, 2018 through June 30, 2019 and under examination for certain subsidiary companies in India for the year ended March 31, 2016; Philippines for the years ended June 30, 2018 through June 30, 2019; Germany for the years ended June 30, 2012 through June 30, 2018; and South Korea for the years ended December 31, 2016 through December 31, 2020. The Company believes its income tax reserves for these tax matters are adequate.