INCOME TAXES

3 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

As of June 30, 2024 and March 31, 2024, the Company had $1.1 million of total gross unrecognized tax benefits including interest. Approximately $0.9 million represents the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. At June 30, 2024, approximately $0.4 million of gross unrecognized tax benefits are expected to be resolved during the next twelve months through the expiration of the statute of limitations and settlement with taxing authorities. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company had approximately $330.8 thousand accrued for gross interest as of June 30, 2024, and accrued $13.8 thousand during the three months ended June 30, 2024.

Investment in HTC was $32.7 million and $24.8 million as of June 30, 2024 and March 31, 2024, respectively, which is included as a component of Other assets, net in the Consolidated Balance Sheets. The Company recognized net amortization from these investments of $4.1 million and $1.3 million during the three months ended June 30, 2024 and 2023, respectively, in income tax expense. The Company recognized tax benefits from these investments of $4.5 million and $1.5 million during the three months ended June 30, 2024 and 2023, respectively, in income tax expense and in Income taxes payable in the Consolidated Statements of Cash Flows. The Company did not recognize any non-tax related activity or have any significant modifications in the investments during the current period.

The Company is subject to U.S. income taxes, as well as taxes in various other state and local jurisdictions. With the exception of a few states, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2020, although carryforward attributes that were generated prior to 2020 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period.

The Company’s effective income tax rate increased to 23.1% for the three months ended June 30, 2024 compared to 22.8% for the prior year quarter. The effective tax rate remained substantially unchanged from the prior year quarter with a slight increase due to return to provision adjustments recorded as discrete items in the prior year quarter.