Income Taxes |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | INCOME TAXES In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. The statutory tax rate in Ireland is being used as a comparison since the Company is domiciled in Ireland. For the three months ended June 30, 2025, the Company's effective tax rate for continuing operations was 12.3% and was lower than the statutory tax rate of 12.5% primarily due to the benefits of continuing global tax planning, partially offset by tax rate differentials. For the nine months ended June 30, 2025, the Company's effective tax rate for continuing operations was 9.9% and was lower than the statutory tax rate of 12.5% primarily due to tax reserve adjustments as the result of expired statute of limitations for certain tax years and the benefits of continuing global tax planning, partially offset by tax rate differentials. For the three months ended June 30, 2024, the Company's effective tax rate for continuing operations was 17.0% and was higher than the statutory tax rate of 12.5% primarily due to the tax impact of the water systems Aqueous Film Forming Foam ("AFFF") insurance proceeds and tax rate differentials, partially offset by the benefits of continuing global tax planning. For the nine months ended June 30, 2024, the Company's effective tax rate for continuing operations was 0.1% and was lower than the statutory tax rate of 12.5% primarily due to the net tax impact of the water systems AFFF settlement costs and insurance proceeds, Swiss tax reform, and the benefits of continuing global tax planning, partially offset by the tax impact of an impairment charge, the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain consolidated subsidiaries, and tax rate differentials. Refer to Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further disclosure related to the water systems AFFF settlement. Uncertain Tax Positions At September 30, 2024, the Company had gross tax-effected unrecognized tax benefits of $2.1 billion, of which $1.5 billion, if recognized, would impact the effective tax rate. Accrued interest, net at September 30, 2024 was approximately $398 million (net of tax benefit). Interest accrued during the nine months ended June 30, 2025 and 2024 was approximately $64 million and $90 million (both net of tax benefit), respectively. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the nine months ended June 30, 2025, as the result of the expiration of the statute of limitations in certain jurisdictions, the Company adjusted its reserve for uncertain tax positions which resulted in a $36 million net benefit to income tax expense. In the U.S., fiscal years 2019 through 2020 are currently under audit and fiscal years 2017 through 2018 are currently under appeal with the Internal Revenue Service (“IRS”) for certain legal entities. In addition, fiscal years 2016 through 2019 are also under exam by the IRS in relation to a separate consolidated filing group. Additionally, the Company is currently under exam in the following major non-U.S. jurisdictions for continuing operations:
It is reasonably possible that tax examinations and/or tax litigation will conclude within the next twelve months, which could have a material impact on tax expense. Based upon the circumstances surrounding these examinations, the impact is not currently quantifiable. Impacts of Tax Legislation On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was signed into law by the president of the United States. It includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain key Tax Cuts & Jobs Act provisions (both U.S. and non-U.S.), and expanding certain Inflation Reduction Act incentives while accelerating the phase-out of others. The Company does not expect the OBBB to have a material impact on tax expense. On December 18, 2023, the president of Ireland signed into law the Finance (No. 2) Bill 2023, which included legislation regarding the implementation of the Pillar Two global minimum tax. The Pillar Two legislation is effective for the Company’s fiscal year beginning October 1, 2024. The impact in the current fiscal year will not be material; however, the Company is continuing to assess the future impact of the new legislation. On September 11, 2023, the Schaffhausen parliament approved a partial revision of the cantonal act on direct taxation: Immediate Minimum Taxation Measure (“IMTM”). On November 19, 2023, IMTM was approved in a public referendum in the canton of Schaffhausen, was published in the cantonal official gazette on December 8, 2023, and was effective starting January 1, 2024. The IMTM increased Switzerland's combined statutory income tax rate to approximately 15%. As a result, in the nine months ended June 30, 2024, the Company recorded a noncash discrete net tax benefit of $80 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen.
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