Loss before income tax provision for domestic and non-U.S. operations is as follows (in thousands):

	December 31,
	2020			2019
Loss from operations before income tax provision:
U.S. (a)	$	(6,321	)	$	(1,960	)
Foreign (a)		1,289			1,135
Loss from operations before income tax provision	$	(5,032	)	$	(825	)

(a)

U.S. and Foreign loss from operations before income tax provision for 2019 was adjusted for intercompany capital losses associated with the dissolution of foreign subsidiaries.

	December 31,
	2020			2019
Deferred:
Federal	$	—		$	—
State		—			—
Foreign		—			—
	$	—		$	—
Current:
Federal	$	—		$	(1	)
State		(15	)		30
Foreign		88			297
Total current		73			326
Total provision for income taxes	$	73		$	326

Significant items making up deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2020			2019
Deferred tax assets:
Allowances not currently deductible for tax purposes	$	451		$	433
Net operating loss carryforwards		45,196			48,860
Operating lease liabilities		513			1,135
General carryforwards		16,242			13,366
Stock options		1,291			1,229
Accrued and other		1,990			1,900
		65,683			66,923
Less valuation allowance		(62,699	)		(62,492	)
		2,984			4,431
Deferred tax liability:
Depreciation and amortization		(1,032	)		(1,556	)
Operating lease right-of-use assets		(169	)		(1,086	)
State income taxes		(1,783	)		(1,789	)
		(2,984	)		(4,431	)
Net deferred tax liability	$	—		$	—

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2020. Such objective evidence limits the ability to consider other subjective evidence such as the Company’s projections for future growth.

A valuation allowance of $62.7 million and $62.5 million as of December 31, 2020 and 2019, respectively, has been recorded to offset the related net deferred tax assets as the Company is unable to conclude that it is more likely than not that such deferred tax assets will be realized. The net deferred tax liabilities are primarily from foreign tax liabilities as well as intangibles acquired as a result of the acquisition of Hirsch and 3VR, which are not deductible for tax purposes.

Section 951A under the Tax Cuts and Jobs Act (the “Act”) requires a U.S. shareholder of a controlled foreign corporation to include in taxable income the shareholder’s share of global intangible low-taxed income (“GILTI”) for the year. The Company has determined that the Section 951A provisions do apply to its operations and relationships with its controlled foreign corporations (“CFCs”). The Company recorded no GILTI income in 2020 due to net tested losses at its CFCs. The Company recorded GILTI income of $0.5 million in 2019.

As of December 31, 2020, the Company had net operating loss carryforwards of $119.4 million for federal, $45.9 million for state and $73.6 million for foreign income tax purposes. Certain of the Company’s federal, state and foreign loss carryforwards have started expiring and will continue to expire through 2040 if not utilized.

The Tax Reform Act of 1986 (the “Tax Reform Act”) limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in stock ownership. The Company completed its acquisition of Bluehill ID AG on January 4, 2010, which resulted in a stock ownership change as defined by the Tax Reform Act. The Company also completed its acquisition of 3VR on February 14, 2018, which resulted in a stock ownership change as defined by the Tax Reform Act. These transactions resulted in limitations on the annual utilization of federal and state net operating loss carryforwards and credits. As a result, the Company reevaluated its available deferred tax assets, and the loss carryforward and credit amounts, excluding the valuation allowance presented above have been adjusted for the limitation resulting from the change in ownership in accordance with the provisions of the Tax Reform Act.

The provision for income taxes reconciled to the amount computed by applying the statutory federal tax rate to the loss before income taxes from operations is as follows (in thousands):

	December 31,
	2020			2019
Income tax provision at statutory federal tax rate of 21%	$	(1,057	)	$	(173	)
State taxes, net of federal benefit		(12	)		23
Foreign taxes provisions provided for at rates other than U.S statutory rate		(202	)		(486	)
Section 951(A) inclusion		—			108
Expiration of capital loss carryforwards		—			(689	)
Change in valuation allowance		1,432			1,668
Permanent differences		(76	)		(135	)
Acquisition costs		2			10
Other		(14	)		—
Total provision for income taxes	$	73		$	326

The Company applies the provisions of, and accounted for uncertain tax positions in accordance with, ASC 740. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, and alternative minimum tax credit refunds. The Company analyzed the provisions of the CARES Act and determined there was no significant impact to its provision for income taxes for the year ended December 31, 2020.

On June 29, 2020, California Governor Gavin Newsom signed Assembly Bill 85 (“AB85”) into law as part of the California 2020 Budget Act, which temporarily suspends the use of California net operating losses and imposes a cap on the amount of business incentive tax credits that companies can utilize against their net income for tax years 2020, 2021, and 2022. The Company analyzed the provisions of AB 85 and determined there was no impact on the Company’s provision for income taxes for the current period.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the “CAA”) was signed ito law. The CAA includes provisions meant to clarify and modify certain items put forth in CARES Act, while providing aid to businesses affected by the pandemic. The CAA allows deductions for expenses paid for by Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) Program, clarifies forgiveness of EIDL advances, and other business provisions. The Company analyzed the provisions of the CAA and determined there was no significant impact to its provision for income taxes for the year ended December 31, 2020.

A reconciliation of the beginning and ending amount of unrecognized tax benefits with an impact on the Company’s consolidated balance sheets or results of operations is as follows (in thousands):

	2020			2019
Balance at January 1	$	2,687		$	2,879
Additions based on tax positions related to the current year		1			2
Additions for tax positions of prior years		—			2
Reductions in prior year tax positions		(381	)		(196	)
Balance at December 31	$	2,307		$	2,687

While timing of the resolution and/or finalization of tax audits is uncertain, the Company does not believe that its unrecognized tax benefits as presented in the above table would materially change in the next 12 months.

As of December 31, 2020 and 2019, the Company recognized liabilities for unrecognized tax benefits of $2.3 million and $2.7 million, respectively, which were accounted for as a decrease to deferred tax assets. Since there was a full valuation allowance against these deferred tax assets, there was no impact on the Company’s consolidated balance sheets or statements of comprehensive loss for the years ended December 31, 2020 and 2019. Also the subsequent recognition, if any, of these previously unrecognized tax benefits would not affect the effective tax rate. Such recognition would result in adjustments to other tax accounts, primarily deferred taxes. The amount of unrecognized tax benefits which, if recognized, would affect the tax rate is $0.1 million as of December 31, 2020 and 2019.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. During fiscal 2020, the Company recorded a decrease to accrued penalties of $5,000 and a decrease in accrued interest of $21,000 related to the unrecognized tax benefits noted above. As of December 31, 2020, the Company has recognized a total liability for penalties of $7,000 and interest of $14,000. During fiscal 2019, the Company recorded a decrease in accrued penalties of $1,000 and an increase in accrued interest of $2,000 related to the unrecognized tax benefits noted above. As of December 31, 2019, the Company had recognized a total liability for penalties of $12,000 and interest of $35,000.

The Company files U.S. federal, U.S. state and foreign tax returns. The Company generally is no longer subject to tax examinations for years prior to 2016. However, if loss carryforwards of tax years prior to 2016 are utilized in the U.S., these tax years may become subject to investigation by the tax authorities.