Additions related to business combinations

[Table of Contents](#i3e760ad3c5f94c5892b7ddc949ade806_7)The following analysis reconciles the statutory federal income tax rate to the effective income tax rates reflected above:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | Year Ended June 30, |
|  | 2022 |  | 2021 |  | 2020 |
| Computed "expected" tax expense | 21.0  | % |  | 21.0  | % |  | 21.0  | % |
| Increase (reduction) in taxes resulting from: |   |  |   |  |   |
| State income taxes, net of federal income tax benefits | 4.3  | % |  | 3.2  | % |  | 3.6  | % |
| Research and development credit | (2.0) | % |  | (2.4) | % |  | (2.4) | % |
|  |  |  |  |  |  |
|  |  |  |  |  |  |
|  |  |  |  |  |  |
| Other (net) | (0.1) | % |  | (0.1) | % |  | (0.1) | % |
|   | 23.2  | % |  | 21.7  | % |  | 22.1  | % |

As of June 30, 2022, the Company has $918 of gross federal net operating loss (“NOL”) pertaining to the acquisition of Goldleaf Financial Solutions, Inc. which is expected to be utilized after the application of IRC Section 382. Separately, as of June 30, 2022, the Company has state NOL and tax credit carryforwards with a tax-effected value of $215 and $1,700, respectively. The federal and state loss and credit carryover have varying expiration dates, ranging from fiscal 2023 to 2042. Based on state tax rules which restrict utilization of these losses and tax credits, the Company believes it is more likely than not that $200 of these losses and tax credits will expire unutilized. Accordingly, valuation allowances of $200 and $270 have been recorded against the state net operating losses and tax credit carryforwards as of June 30, 2022 and 2021, respectively.The Company paid income taxes, net of refunds, of $60,553, $80,220, and $63,692 in fiscal 2022, 2021, and 2020, respectively.At June 30, 2022, the Company had $8,990 of gross unrecognized tax benefits, $8,066 of which, if recognized, would affect its effective tax rate. At June 30, 2021, the Company had $8,762 of unrecognized tax benefits, $8,119 of which, if recognized, would affect its effective tax rate. The Company had accrued interest and penalties of $1,234 and $1,180 related to uncertain tax positions at June 30, 2022 and 2021, respectively. The income tax provision included interest expense and penalties (or benefits) on unrecognized tax benefits of $73, $(310), and $38 in the fiscal years ended June 30, 2022, 2021, and 2020, respectively.A reconciliation of the unrecognized tax benefits for the fiscal years ended June 30, 2022, 2021, and 2020 follows:

|  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |
|   | Unrecognized Tax Benefits |
| Balance at July 1, 2019 | $ | 10,495  |  |
| Additions for current year tax positions | 1,451  |  |
|  |  |
| Additions for prior year tax positions | 867  |  |
|  |  |
| Additions related to business combinations | 192  |  |
|  |  |
| Reductions related to expirations of statute of limitations | (2,893) |  |
| Balance at June 30, 2020 | 10,112  |  |
| Additions for current year tax positions | 1,598  |  |
|  |  |
| Additions for prior year tax positions | 490  |  |
| Reductions for prior year tax positions | (30) |  |
|  |  |
|  |  |
| Reductions related to expirations of statute of limitations | (3,408) |  |
| Balance at June 30, 2021 | 8,762  |  |
| Additions for current year tax positions | 1,863  |  |
|  |  |
| Additions for prior year tax positions | 1,642  |  |
| Reductions for prior year tax positions | (36) |  |
|  |  |
|  |  |
| Reductions related to expirations of statute of limitations | (3,241) |  |
| Balance at June 30, 2022 | $ | 8,990  |  |

The U.S. federal income tax returns for fiscal 2019 and all subsequent years remain subject to examination as of June 30, 2022 under statute of limitations rules. The U.S. state income tax returns that remain subject to examination as of June 30,2022 under the statute of limitation rules varies by state jurisdiction from fiscal 2016 through 2019 and all subsequent years. The Company anticipates that potential changes due to lapsing statutes of limitations and examination closures could reduce the unrecognized tax benefits balance by $1,500 - $4,000 within twelve months of June 30, 2022.52
