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Income Taxes
 12 Months Ended
Mar. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income Before Income Taxes. Components of income before income taxes recorded in the consolidated statements of comprehensive income were as follows:

Years Ended March 31,
202220212020
Domestic*$396,368 $368,328 $206,111 
Foreign168,270 133,186 134,755 
Total$564,638 $501,514 $340,866 

*Domestic income before income taxes for the years ended March 31, 2022, 2021, and 2020 is presented net of intercompany dividends of $120,000, $175,000, and $150,000, respectively.
Income Tax Expense. Components of income tax expense (benefit) recorded in the consolidated statements of comprehensive income were as follows:

Years Ended March 31,
202220212020
Current
Federal$95,012 $93,562 $47,087 
State22,544 15,595 635 
Foreign22,929 17,953 14,068 
Total140,485 127,110 61,790 
Deferred
Federal(17,316)(6,717)4,626 
State(4,827)(633)(462)
Foreign(5,653)(821)(1,230)
Total(27,796)(8,171)2,934 
Total$112,689 $118,939 $64,724 

Income Tax Expense Reconciliation. Income tax expense (benefit) differed from that obtained by applying the statutory federal income tax rate to income before income taxes as follows:

Years Ended March 31,
202220212020
Computed expected income taxes$118,574 $105,318 $71,582 
State income taxes, net of federal income tax benefit16,899 16,479 11,042 
Foreign rate differential(22,188)(15,507)(17,966)
Unrecognized tax benefits(494)7,632 6,695 
Return to provision adjustments(3,736)— — 
Dividends from previously taxed earnings(4,240)(5,313)(4,584)
Nondeductible executive compensation11,059 11,070 4,162 
US tax on foreign earnings4,325 4,252 2,343 
Tax audit settlements795 1,147 (3,956)
Employee stock-based compensation excess tax benefits(10,916)(6,846)(2,477)
Other2,611 707 (2,117)
Total$112,689 $118,939 $64,724 

Deferred Taxes. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows:
As of March 31,
20222021
Deferred tax assets
Amortization and impairment of intangible assets$4,828 $7,302 
Nonvested stock-based compensation7,695 7,138 
Operating lease liabilities37,020 37,707 
Uniform capitalization adjustment to inventory11,996 5,256 
As of March 31,
20222021
Bad debt allowance and other reserves26,627 19,321 
Accrued bonuses7,572 8,491 
Foreign currency translation649 646 
Net operating loss carry-forwards, net of valuation allowances1,802 1,663 
Deferred revenue22,074 817 
Other1,375 2,231 
Gross deferred tax assets121,638 90,572 
Valuation allowances(1,206)(1,197)
Total120,432 89,375 
Deferred tax liabilities
Prepaid expenses(5,460)(3,829)
Operating lease assets(28,831)(30,754)
Depreciation of property and equipment(21,924)(17,598)
Total(56,215)(52,181)
Deferred tax assets, net$64,217 $37,194 

In order to fully realize the deferred tax assets, the Company will need to generate future taxable income of $243,217. The deferred tax assets are primarily related to the Company’s domestic operations and are currently expected to be realized between fiscal years 2023 and 2031. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets. The Company’s deferred tax valuation allowances are primarily the result of foreign losses in jurisdictions with limited future profitability.

US Taxation of Foreign Earnings. The Company is subject to US taxation of its foreign subsidiary earnings considered global intangible low-taxed income, as well as limitations on the deductions of executive compensation, which are included in income tax expense in the consolidated statements of comprehensive income for the periods presented above. Beginning with the tax year ended March 31, 2018, pursuant to the Tax Reform Act, an installment election was made to pay the transition tax on the deemed repatriation of foreign subsidiaries’ earnings over eight years. The cumulative remaining balance as of March 31, 2022, is $38,263, with $4,502 recorded in income tax payable and $33,761 in long-term income tax liability in the consolidated balance sheets.

As of March 31, 2022, the Company has $336,582 of undistributed earnings from its non-US subsidiaries, of which $133,053 relates to cash and cash equivalents, a portion of which may be subject to additional foreign withholding taxes if it were to be repatriated. As of March 31, 2022, the Company has $15,381 of accumulated earnings from its non-US subsidiaries for which no US federal or state income taxes have been provided. The Company currently anticipates repatriating current and future unremitted earnings of non-US subsidiaries, to the extent they have been and will be subject to US income tax, as long as such cash is not required to fund ongoing foreign operations. Due to the complexities in the laws of foreign jurisdictions, it is not practicable to estimate the amount of foreign withholding taxes associated with such unremitted earnings. During the year ended March 31, 2022, the Company declared a dividend of $120,000 from a foreign subsidiary, for which no foreign withholding taxes were required.

Unrecognized Tax Benefits. When tax returns are filed, some positions taken are subject to uncertainty about the merits of the position taken or the amount that would be ultimately sustained upon examination. The benefit of a tax position is recorded in the consolidated financial statements in the period during which the Company believes it is more likely than not that the position will be sustained upon examination by taxing authorities. The recognition
threshold is measured as the largest amount of tax benefit that is more than 50% likely to be realized upon settlement. The portion of the benefit that exceeds the amount measured, as described above, is recorded as a liability for unrecognized tax benefits, along with any associated interest and penalties, in the consolidated balance sheets.

A reconciliation of the beginning and ending amounts of total gross unrecognized tax benefits are as follows:

Balance, March 31, 2019$10,942 
Gross increase related to current fiscal year tax positions1,153 
Gross increase related to prior fiscal year tax positions8,152 
Settlements(246)
Lapse of statute of limitations(2,363)
Balance, March 31, 202017,638 
Gross increase related to current fiscal year tax positions2,242 
Gross increase related to prior fiscal year tax positions8,566 
Settlements(1,215)
Lapse of statute of limitations(1,961)
Balance, March 31, 202125,270 
Gross increase related to current fiscal year tax positions2,520 
Gross increase related to prior fiscal year tax positions2,750 
Gross decrease related to prior fiscal year tax positions(243)
Settlements(795)
Lapse of statute of limitations(4,723)
Balance, March 31, 2022$24,779 

Total gross unrecognized tax benefits recorded in the consolidated balance sheets are as follows:

As of March 31,
20222021
Current liability
Income tax payable$— $1,038 
Long-term liability
Income tax liability24,779 24,232 
Total$24,779 $25,270 

As of March 31, 2022, and 2021, the Company has accrued $4,722 and $4,782 for the payment of interest and penalties, respectively, in income tax liability in the consolidated balance sheets. During the years ended March 31, 2022, 2021, and 2020, the Company recorded $(60), $1,151, and $1,176, respectively, of interest and penalties as an increase or (decrease) to interest expense in the consolidated statements of comprehensive income.

Management believes it is reasonably possible that the amount of unrecognized tax benefits, as well as associated interest and penalties, may decrease during the next 12 months by $1,351, which includes amounts relating to expirations of statute of limitations on liabilities of $2,531, partially offset by $1,180 for additional unrecognized tax benefits relating to current fiscal year tax return positions. Of this amount, $1,197 would result in an income tax benefit for the Company and $154 would result in a decrease to interest expense in the consolidated statements of comprehensive income.
Net unrecognized tax benefits are defined as gross unrecognized tax benefits, less federal benefit for state income taxes, related to uncertain tax positions taken in the Company’s income tax return that would impact the Company’s effective tax rate, if recognized. Net unrecognized tax benefits of $23,433, $23,883, and $16,685 for the years ended March 31, 2022, 2021, and 2020, respectively, would reduce the annual effective tax rate recorded in the consolidated statements of comprehensive income.

The Company has on-going income tax examinations in various state and foreign tax jurisdictions and regularly assesses tax positions taken in years open to examination. The Company files income tax returns in the US federal jurisdiction and various state, local, and foreign jurisdictions. With few exceptions, the Company is no longer subject to US federal, state, local, or foreign income tax examinations by tax authorities before fiscal year 2018.

Although the Company believes its tax estimates are reasonable and prepares its tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company’s estimates or from its historical income tax provisions and accruals. The results of an audit or litigation could have a material impact on results of operations or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, or interest assessments. However, it is the opinion of management that the Company does not currently expect these audits and inquiries to have a material impact on the Company’s consolidated financial statements.