Income Taxes

9 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 – Income Taxes

Our provision for income taxes was $233 million and $697 million for the three and nine months ended December 31, 2021, respectively, compared to $215 million and $546 million for the same periods in fiscal 2021.  Our effective tax rate was 24 percent and 23 percent for the three and nine months ended December 31, 2021, respectively, compared to 24 percent for each of the same periods in fiscal 2021.  The increase in the provision for income taxes for the three and nine months ended December 31, 2021, compared to the same periods in fiscal 2021, was primarily due to the increase in income before income taxes.  The lower effective tax rate for the first nine months of fiscal 2022, compared to the same period in fiscal 2021, was primarily attributable to the tax benefit from the federal tax credits recognized in fiscal 2022 as well as the enacted state tax law changes that resulted in higher state tax expense in fiscal 2021.

Tax-related Contingencies

As of December 31, 2021, we remain under IRS examination for fiscal 2018 through fiscal 2022.  

We periodically review our uncertain tax positions.  Our assessment is based on many factors including any ongoing IRS audits.  For the three months ended December 31, 2021, our assessment did not result in a material change in unrecognized tax benefits.

Our deferred tax assets include the deferred deduction of allowance for credit losses and residual value loss estimates and other deferred costs.  The total deferred tax liability, net of these deferred tax assets, was $2.4 billion and $2.9 billion at December 31, 2021 and March 31, 2021, respectively.  Although realization of the deferred tax assets is not assured, management believes it is more likely than not that the deferred tax assets will be realized.  The amount of the deferred tax assets considered realizable could be reduced if management’s estimates change.