v3.25.2
Income Taxes
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE 9: INCOME TAXES
We file a consolidated federal income tax return in the U.S. with the IRS and file tax returns in various state, local, and foreign jurisdictions. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. With respect to federal, state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. On November 7, 2022, the IRS commenced their examination of our 2020 tax return and related carryback claims to tax years 2015 through 2018. Our U.S. federal income tax returns for tax years 2021, 2019, and 2014 and prior are closed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.
The components of income from continuing operations upon which domestic and foreign income taxes have been provided are as follows:
(in 000s)
Year ended June 30,202520242023
Domestic$437,971 $489,912 $447,900 
Foreign343,432 272,410 263,312 
$781,403 $762,322 $711,212 
We operate in multiple income tax jurisdictions both within the U.S. and internationally. Accordingly, management must determine the appropriate allocation of income to each of these jurisdictions based on transfer pricing analyses of comparable companies and predictions of future economic conditions. Although these intercompany transactions reflect arm’s length terms and the proper transfer pricing documentation is in place, transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact our mix of earnings in countries with differing statutory tax rates.
The reconciliation between the statutory U.S. federal tax rate and our effective tax rate from continuing operations is as follows:
Year ended June 30,202520242023
U.S. statutory tax rate21.0 %21.0 %21.0 %
Change in tax rate resulting from:
State income taxes, net of federal income tax benefit1.3 %1.4 %1.6 %
Earnings taxed in foreign jurisdictions(2.1)%(1.9)%(2.9)%
Permanent differences0.7 %0.7 %0.6 %
Uncertain tax positions1.9 %(0.4)%(0.9)%
U.S. tax on income from foreign affiliates1.7 %4.1 %3.1 %
Federal income tax credits(1.6)%(2.4)%(1.3)%
Foreign investment recapture— %2.6 %— %
Change in valuation allowance - domestic0.3 %— %(0.4)%
Change in valuation allowance - foreign— %(2.8)%0.7 %
Other(1.2)%(0.7)%(0.5)%
Effective tax rate22.0 %21.6 %21.0 %
The components of income tax expense for continuing operations are as follows:
(in 000s)
Year ended June 30,202520242023
Current:
Federal$143,298 $191,664 $97,430 
State30,716 9,695 19,023 
Foreign21,689 18,240 18,214 
195,703 219,599 134,667 
Deferred:
Federal(52,659)(59,441)23,367 
State(4,454)(11,749)1,860 
Foreign33,363 15,950 (10,482)
(23,750)(55,240)14,745 
Total income taxes for continuing operations$171,953 $164,359 $149,412 
In the United States, on July 4, 2025, H.R. 1 was signed into law. Among other provisions, the legislation reinstates immediate expensing for domestic research and experimental expenditures, extends 100% bonus depreciation for qualified property placed in service beginning January 20, 2025, and makes certain other provisions of the Tax Cuts and Jobs Act permanent. We are evaluating the impacts of this legislation and will reflect its impact in our financial statements in fiscal year 2026. At this time, we are unable to reasonably estimate the financial impact of these changes.
We account for income taxes under the asset and liability method, which requires us to record deferred income tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying value of existing assets and liabilities and their respective tax basis. Deferred taxes are determined separately for each tax-paying component within each tax jurisdiction based on provisions of enacted tax law. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We record a valuation allowance to reduce our deferred tax assets to the estimated amount that we believe is more likely than not to be realized. Determination of a valuation allowance for deferred tax assets requires that we make judgments about future matters that are not certain, including projections of future taxable income and evaluating potential tax-planning strategies.
The significant components of deferred tax assets and liabilities are reflected in the following table:
(in 000s)
As ofJune 30, 2025June 30, 2024
Deferred tax assets:
Deferred revenue33,435 50,944 
Allowance for credit losses30,098 30,581 
Deferred and stock-based compensation7,204 8,060 
Net operating loss carry-forward38,856 63,398 
Lease liabilities130,911 117,483 
Federal tax benefits related to state unrecognized tax benefits31,061 26,841 
Internally developed software84,301 15,063 
Intangibles - intellectual property61,138 71,367 
Other22,121 6,056 
Valuation allowance(18,538)(16,569)
Total deferred tax assets420,587 373,224 
Deferred tax liabilities:
Prepaid expenses and other(20,396)(3,001)
Lease right of use assets(128,204)(115,128)
Intangibles(43,879)(51,398)
Total deferred tax liabilities(192,479)(169,527)
Net deferred tax assets$228,108 $203,697 
A reconciliation of the deferred tax assets and liabilities and the corresponding amounts reported in the consolidated balance sheets is as follows:
(in 000s)
As ofJune 30, 2025June 30, 2024
Deferred income tax assets$228,108 $203,697 
Deferred tax liabilities— — 
Net deferred tax asset$228,108 $203,697 
Changes in our valuation allowance for fiscal years 2025, 2024 and 2023 are as follows:
(in 000s)
Year ended June 30,202520242023
Balance, beginning of the year$16,569 $57,566 $55,172 
Additions charged to costs and expenses4,166 4,584 6,438 
Deductions(2,197)(45,581)(4,044)
Balance, end of the year$18,538 $16,569 $57,566 
Our valuation allowance on deferred tax assets has a net increase of $2.0 million during the current period. The $4.2 million of additions charged to costs is primarily related to foreign tax credits that we do not expect to utilize in future years. The increase is offset by a $2.2 million decrease to our valuation allowance balance for adjustments related to certain domestic and foreign net operating losses utilized in the current fiscal year and changes in future projections of net operating loss utilization.
Certain of our subsidiaries file stand-alone returns in various state, local and foreign jurisdictions, and others join in filing consolidated or combined returns in such jurisdictions. As of June 30, 2025, we had net operating losses of $38.9 million in various states and foreign jurisdictions. The amount of state and foreign net operating losses varies by taxing jurisdiction. We maintain a valuation allowance of $4.3 million on state net operating losses and $5.5 million on foreign net operating losses for the portion of such loses that, more likely than not, will not be realized. Of the total net operating loss deferred tax assets, $29.1 million are more likely than not to be realized. Net operating loss deferred tax assets of $10.4 million will expire in varying amounts during fiscal years 2026 through 2045 and the remaining $28.5 million have no expiration.
We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a tax liability; therefore, no provision has been made for income taxes that might be payable upon remittance of such earnings. The amount of unrecognized tax liability on these foreign earnings, net of expected foreign tax credits, is immaterial as of June 30, 2025.
Changes in unrecognized tax benefits for fiscal years 2025, 2024 and 2023 are as follows:
(in 000s)
Year ended June 30,202520242023
Balance, beginning of the year$251,787 $240,063 $232,004 
Additions based on tax positions related to prior years574 1,232 1,252 
Reductions based on tax positions related to prior years— (4,604)— 
Additions based on tax positions related to the current year37,883 37,063 33,330 
Reductions related to settlements with tax authorities(379)(4,472)(661)
Expiration of statute of limitations(23,317)(17,495)(25,862)
Balance, end of the year$266,548 $251,787 $240,063 
Included in the total gross unrecognized tax benefit ending balance as of June 30, 2025, 2024 and 2023 are $232.8 million, $207.5 million and $209.0 million respectively, which if recognized, would impact our effective tax rate. Increases from prior year are primarily related to additions based on current year tax positions offset by expirations of statute of limitations and settlements with taxing authorities.
We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $152.0 million within the next twelve months. The anticipated decrease is due to the expiration of statutes of limitations, anticipated closure of various tax matters currently under examination, and settlements with tax authorities. For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.
Interest and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense. The total gross interest recorded to income tax expense for periods ending June 30, 2025, 2024 and 2023 totaled $1.4 million, $14.1 million and $10.1 million, respectively. The total penalties, if any, recorded for the same periods
were immaterial. The total gross interest and penalties accrued as of June 30, 2025 and 2024 totaled $44.7 million and $42.0 million, respectively.