Income Taxes |
3 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company’s effective income tax rates were 21.1% and (25.5)% for the three months ended June 30, 2026 and 2025, respectively. Our effective tax rates for these periods differ from the federal statutory rate of 21.0% primarily due to the inclusion of state income taxes and permanent rate differences, which are predominantly related to certain executive compensation and the accrual of reserves for uncertain tax positions, offset by research and development tax credits, excess tax benefits for employee share-based compensation, and the Foreign-Derived Deduction-Eligible Income deduction. In addition, the fiscal year 2026 effective tax rate was also lower related to adjustments to the Company’s uncertain tax position (UTP) reserves as outlined below. As of June 30, 2026 and March 31, 2026, the Company recorded $80 million and $75 million, respectively, of reserves for uncertain tax positions (“UTPs”) primarily related to research and development tax credits. During the quarter ended June 30, 2025, the Company reduced its UTPs by $89 million, primarily related to an $86 million adjustment from the completion of Internal Revenue Service (the “IRS”) examination procedures of the Company’s amended federal income tax returns through fiscal year 2021. No similar adjustment was recorded in the three months ended June 30, 2026. Due to the magnitude of the refund requested in the amended returns, the case will be referred to the Joint Committee on Taxation (the “JCT”) for further evaluation, as required by law for tax refunds or reductions exceeding $5 million. While the JCT has not yet reviewed this case, management does not anticipate that the resolution of this review will have a material adverse effect on the Company’s financial position or results of operations. In addition, the Company has accrued a tax benefit for interest income (net of tax effect) on the long-term receivable related to the refund requested on the amended returns of $1 million and $20 million for the three months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and March 31, 2026, the Company recorded long-term income tax receivables of $180 million and $178 million, respectively, which represents the amended U.S. federal return refund claims related to the audits referenced above and remains classified as other long-term assets on the condensed consolidated balance sheet as the case is subject to JCT review.
|