Income Taxes

9 Months Ended

Mar. 31, 2021

The income tax expense (benefit) and the related effective tax rates are as follows (in thousands, except effective tax rate):


	Three Months Ended March 31,						Nine Months Ended March 31,
	2021			2020			2021			2020
Income tax (benefit) expense	$	(60)		$	(1,034)		$	13,785		$	(1,222)
Effective tax rate	(0.4)		%	2.5		%	(57.7)		%	4.3		%

The effective tax rate in nine months ended March 31, 2021 is negative primarily due to the $13.5 million of previously deferred non-cash tax expense in accumulated other comprehensive income associated with gains on the postretirement medical plan in prior years. Upon termination of this plan on December 31, 2020, the deferred non-cash tax expense was recognized in net income in the second quarter of fiscal 2021. The negative effective tax rate in the three months ended March 31, 2021, and the positive effective tax rates in the three and nine months ended March 31, 2020, are due to change in previously recorded valuation allowance and change in our estimated deferred tax liability. The Company’s interim tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The Company recognizes the effects of tax legislation in the period in which the law is enacted. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the Company estimates the related temporary differences to reverse. The Company evaluates its deferred tax assets quarterly to determine if a valuation allowance is required. In making such assessment, significant weight is given to evidence that can be objectively verified, such as recent operating results, and less consideration is given to less objective indicators such as future income projections.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state and local tax authorities. With limited exceptions, as of March 31, 2021 and June 30, 2020, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2018. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.