Income Taxes	6 Months Ended
Mar. 31, 2021
Income Taxes
Income Taxes	3. Income Taxes In March 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of NOLs. The CARES Act amends the NOL provisions of the Tax Act, allowing for the carryback of losses arising in tax years beginning before December 31, 2017, to each of the two taxable years preceding the taxable year of loss. Approximately $1,500,000 of pre-tax NOL was carried back two years to fully offset taxable income. This carryback frees up previously utilized R&D credits, resulting in an estimated increase in R&D credit carryforward of $196,000. The carryback created approximately $16,000 of AMT tax, which was refunded. The cash impact of this carryback was $309,412. A receivable was setup for this amount as of March 31, 2020 and the cash has since been received. On December 27, 2020, the CAA was enacted. The CCA was enacted as a supplement to the CARES legislation providing additional financial relief to taxpayers adversely impacted by restrictions put into place in response to the COVID-19 pandemic. In addition, the CCA provides funding for public health initiatives in response to the pandemic. This legislation does not have a material impact on the Company's tax position. On March 11, 2021, the ARPA was signed into law, which includes certain business tax provisions. The Company does not expect the ARPA to have a material impact on Company’s effective tax rate or income for fiscal year ending on September 30, 2021. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that all or a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance world result in the recognition of our deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are uncertain given the continued impact of the COVID-19 pandemic on future orders and the resulting level of profitability we are able to achieve. The income tax expense for the three-month period ended March 31, 2021 was $20,165 as compared to an income tax benefit of $309,402 for the three-month period ended March 31, 2020. The effective tax expense rate for the three-month period ended March 31, 2021 was 3.2% and differs from the statutory tax rate primarily due to net operating loss utilization related to the increase in pretax book income. This loss utilization both decreased the deferred tax asset and the valuation allowance. A full valuation allowance exists on all deferred tax assets. For the three months ended March 31, 2021, the valuation allowance decreased by approximately $140,000. The effective tax benefit rate for the three-month period ended March 31, 2020 was 240.4% and differs from the statutory tax rate primarily due to the income tax benefit associated with the NOL carryback provisions under the CARES Act and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the three-month period ended March 31, 2020, the valuation allowance decreased by approximately $1,342,000. The income tax expense for the six-month period ended March 31, 2021 was $29,662 as compared to an income tax benefit of $309,402 for the six months ended March 31, 2020. The effective tax expense rate for the six-month period ended March 31, 2021 was 3.4% and differs from the statutory tax rate primarily due to net operating loss utilization related to the increase in pretax book income. This loss utilization both decreased the deferred tax asset and the valuation allowance. A full valuation allowance exists on all deferred tax assets. For the six months ended March 31, 2021, the valuation allowance decreased by approximately $180,000. The effective tax benefit rate for the six-month period ended March 31, 2020 was 67.8% and differs from the statutory tax rate primarily due to the income tax benefit associated with the NOL carryback provisions under the CARES Act and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the six-month period ended March 31, 2020, the valuation allowance decreased by approximately $1,397,000.

3. Income Taxes

In March 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of NOLs. The CARES Act amends the NOL provisions of the Tax Act, allowing for the carryback of losses arising in tax years beginning before December 31, 2017, to each of the two taxable years preceding the taxable year of loss. Approximately $1,500,000 of pre-tax NOL was carried back two years to fully offset taxable income. This carryback frees up previously utilized R&D credits, resulting in an estimated increase in R&D credit carryforward of $196,000. The carryback created approximately $16,000 of AMT tax, which was refunded. The cash impact of this carryback was $309,412. A receivable was setup for this amount as of March 31, 2020 and the cash has since been received.

On December 27, 2020, the CAA was enacted. The CCA was enacted as a supplement to the CARES legislation providing additional financial relief to taxpayers adversely impacted by restrictions put into place in response to the COVID-19 pandemic. In addition, the CCA provides funding for public health initiatives in response to the pandemic. This legislation does not have a material impact on the Company's tax position.

On March 11, 2021, the ARPA was signed into law, which includes certain business tax provisions. The Company does not expect the ARPA to have a material impact on Company’s effective tax rate or income for fiscal year ending on September 30, 2021.

We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that all or a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance world result in the recognition of our deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are uncertain given the continued impact of the COVID-19 pandemic on future orders and the resulting level of profitability we are able to achieve.

The income tax expense for the three-month period ended March 31, 2021 was $20,165 as compared to an income tax benefit of $309,402 for the three-month period ended March 31, 2020.

The effective tax expense rate for the three-month period ended March 31, 2021 was 3.2% and differs from the statutory tax rate primarily due to net operating loss utilization related to the increase in pretax book income. This loss utilization both decreased the deferred tax asset and the valuation allowance. A full valuation allowance exists on all deferred tax assets. For the three months ended March 31, 2021, the valuation allowance decreased by approximately $140,000.

The effective tax benefit rate for the three-month period ended March 31, 2020 was 240.4% and differs from the statutory tax rate primarily due to the income tax benefit associated with the NOL carryback provisions under the CARES Act and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the three-month period ended March 31, 2020, the valuation allowance decreased by approximately $1,342,000.

The income tax expense for the six-month period ended March 31, 2021 was $29,662 as compared to an income tax benefit of $309,402 for the six months ended March 31, 2020.

The effective tax expense rate for the six-month period ended March 31, 2021 was 3.4% and differs from the statutory tax rate primarily due to net operating loss utilization related to the increase in pretax book income. This loss utilization both decreased the deferred tax asset and the valuation allowance. A full valuation allowance exists on all deferred tax assets. For the six months ended March 31, 2021, the valuation allowance decreased by approximately $180,000.

The effective tax benefit rate for the six-month period ended March 31, 2020 was 67.8% and differs from the statutory tax rate primarily due to the income tax benefit associated with the NOL carryback provisions under the CARES Act and the release of the valuation allowance. This loss utilization both decreased the deferred tax asset and the valuation allowance. For the six-month period ended March 31, 2020, the valuation allowance decreased by approximately $1,397,000.