In December 2017, the Tax Cuts and Jobs Act, (“Tax Reform Act”) was signed into law. The Tax Reform Act included significant changes to existing law, including among other items, a reduction to the U.S. federal statutory corporate tax rate from 35% to 21% effective January 1, 2018. ASC 740, Income Taxes (Topic 740) requires that the effects of changes in tax laws or rates be recognized in the period in which the law is enacted. Those effects, both current and deferred, are reported as part of the tax provision, regardless of income in which the underlying pretax income (expense) or asset (liability) was or will be reported.

As a result of the Tax Reform Act, the Company’s U.S. federal statutory corporate income tax rate of 21% was applied in the computation of the income tax provision for the three and nine months ended December 31, 2018.

The Company’s income tax provision was $19.6 million for the three months ended December 31, 2018. The Company’s income tax benefit was $20.2 million for the nine months ended December 31, 2018. The Company’s income tax provision was $32.2 million and $36.6 million for the three and nine months ended December 31, 2017, respectively. The Company’s effective tax rate was 30.5% and (12.3)% for the three and nine months ended December 31, 2018, respectively, and 70.6% and 32.7% for the three and nine months ended December 31, 2017, respectively.

Consistent with guidance issued by the SEC, which provides for a measurement period of one year from the enactment date to finalize the accounting for effects of the Tax Reform Act, the Company provisionally remeasured its net deferred tax assets due to the lower U.S. federal statutory corporate tax rate during the year ended March 31, 2018. The Company’s provisional estimate reflected estimable impacts of the Tax Reform Act on the Company’s estimated annual effective tax rate and discrete items resulting directly from the enactment of the Tax Reform Act based on the information available, prepared, or analyzed (including computations) in reasonable detail. Any adjustments to this provisional estimate would be recorded as adjustments to income tax expense in the period in which those adjustments become estimable and/or are finalized, if necessary. No adjustments were made to the Company’s provisional estimate of the impacts of the Tax Reform Act during the three and nine months ended December 31, 2018. This measurement period ended the quarter ended December 31, 2018.

The Company recognizes excess tax benefits and shortfalls in the income tax provision as discrete items in the period in which restricted stock units vest or stock option exercises occur. The Company recognized excess tax benefits associated with stock-based awards of $1.7 million and $68.5 million as an income tax benefit for the three and nine months ended December 31, 2018, respectively, and $3.2 million and $24.5 million as an income tax benefit for the three and nine months ended December 31, 2017, respectively. The amount of future excess tax benefits or shortfalls will likely fluctuate from period to period based on the price of the Company’s stock, the number of restricted stock units that vest or stock options that are exercised, and the fair value assigned to such stock-based awards under U.S. GAAP.

The significant differences between the statutory and effective income tax rate for the three and nine months ended December 31, 2018 and 2017 consist of the following items:

	For the Three Months Ended December 31,							For the Nine Months Ended December 31,
		2018			2017				2018			2017
Statutory income tax rate		21.0		%	31.5		%		21.0		%	31.5		%
Increase resulting from:
Excess tax benefits from stock-based awards		(2.6	)		(7.0	)			(41.5	)		(21.9	)
Credits		(1.7	)		(2.1	)			(1.7	)		(2.1	)
State taxes, net		4.3			3.7				4.3			3.7
Permanent differences		1.8			1.7				1.8			1.7
Effect of the Tax Reform Act on net deferred tax assets		—			42.1				—			19.6
Excess foreign tax credits		7.9			—				3.7			—
Other		(0.2	)		0.7				0.1			0.2
Effective tax rate		30.5		%	70.6		%		(12.3	)	%	32.7		%

The recently enacted Tax Reform Act allows for a 100% deduction for the potential repatriation of foreign subsidiary earnings with minimal U.S. income tax consequences other than the one-time deemed repatriation toll charge. Since most of the Company’s cash and cash equivalents held by foreign subsidiaries which are disregarded entities for domestic tax purposes, any repatriation of such funds to the U.S. would likely have a nominal tax impact.

The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of multiple state and foreign jurisdictions. During the nine months ended December 31, 2018, the Company closed an income tax audit in Germany which covered fiscal years 2012 through 2015. The audit resulted in an immaterial adjustment to our financial statements. Fiscal years 2016 through 2018 remain open to examination in Germany. The Company also closed an Internal Revenue Service (“IRS”) audit relating to its fiscal year 2016 tax return. The audit resulted in an immaterial adjustment to our financial statements. All other tax years remain subject to examination by the IRS, state and foreign tax authorities.