INCOME TAXES

9 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 7: INCOME TAXES

We file a consolidated federal income tax return in the U.S. with the Internal Revenue Service (IRS) and file tax returns in various state, local, and foreign jurisdictions. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. With respect to federal, state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. On November 7, 2022, the IRS commenced their examination of our 2020 tax return and related carryback claims to tax years 2015 through 2018. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.

We had gross unrecognized tax benefits of $256.3 million and $232.0 million as of March 31, 2023 and June 30, 2022, respectively. The gross unrecognized tax benefits increased by $24.3 million during the nine months ended

March 31, 2023. We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $53.5 million within the next twelve months. The anticipated decrease is due to the expiration of statutes of limitations and anticipated closure of various matters currently under examination or in appeals. For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included. Our effective tax rate for continuing operations, including the effects of discrete tax items, was 23.3% and 8.1% for the nine months ended March 31, 2023 and 2022, respectively. Discrete items decreased the effective tax rate by 1.3% and 14.4% for the nine months ended March 31, 2023, and 2022, respectively. A discrete income tax benefit of $4.2 million and $52.6 million were recorded in the nine months ended March 31, 2023 and 2022, respectively. The discrete tax benefit recorded in the current period primarily resulted from state statute of limitations expirations. The discrete tax benefit recorded in the prior period primarily resulted from federal and state statute of limitations expirations.