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Income Tax
9 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Tax

Note 15. Income Tax

 

On a quarterly basis, the Company provides for income taxes based upon an estimated annual effective income tax rate. The Company recognized income tax expense of $0.3 million and $1.6 million for three and nine months ended March 31, 2020, respectively, primarily related to foreign taxes. The Company recognized an income tax expense of $0.2 million and $1.2 million for the three and nine months ended March 31, 2019,  respectively. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act enacted on March 27, 2020 did not provide an income tax benefit for the Company given the historical U.S. losses and a full valuation allowance against its net U.S. deferred tax assets.

  

 

Starting in fiscal year 2019, certain income earned by controlling foreign corporations (“CFCs”) must be included in the gross income of the CFC’s U.S. shareholder. The income required to be included in gross income is referred to as global intangible low tax income (“GILTI”) and is defined under IRC Section 951A as the excess of the shareholder’s net CFC tested income over the net deemed tangible income return. The GILTI inclusion amount is expected to be fully absorbed by net operating losses and is not expected to cause the Company to be in a U.S. taxable income position for fiscal year 2020.

 

In addition to the GILTI provision, the Tax Act also enacted the Base Erosion and Anti-Abuse Tax (“BEAT”). The BEAT minimum tax under IRC Section 59A is applicable to the extent that the BEAT tax amount is greater than the regular corporate tax for a given year. This tax is applicable to companies with prior 3-year average annual gross receipts exceeding $500 million. The Company does not currently meet this threshold since its current average annual gross receipts are less than $500 million.

 

The Company does not expect its unrecognized tax benefits of $16.3 million to change significantly over the next 12 months. Interest and penalties accrued on unrecognized tax benefits is recorded as a component of income tax expense.