Income Taxes

3 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

The following table compares our income tax expense and effective tax rates for the three months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
(Dollars in thousands)	2022			2021
Income tax expense (benefit)	$	398		$	193
Effective tax rate		11.6	%		8.9	%

For the three months ended June 30, 2022 and 2021, respectively, the effective tax rate was different than the statutory rate due primarily to adjustments to deferred tax assets and to valuation allowances that reduce deferred tax assets and to the recording of net operating losses in a number of foreign jurisdictions offset by current year expense in other foreign jurisdictions. Our India subsidiary operates in a “Special Economic Zone (“SEZ”)”. One of the benefits associated with the SEZ is that the India subsidiary is not subject to regular India income taxes during its first five years of operations, which included fiscal 2018 through fiscal 2022. The India subsidiary is subject to 50% of regular India income taxes during its second five years of operations, which includes fiscal 2023 through fiscal 2027.

Because of our losses in prior periods, we have recorded and maintain a valuation allowance offsetting substantially all of our deferred tax assets in the U.S. and certain foreign jurisdictions, as management believes that it is more likely than not that we will not realize the benefits of these deductible differences. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provides, among other provisions, for the deferral of the employer-paid portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2022.