Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We established a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. Based on available evidence, we have determined that a full valuation allowance is required as of March 31, 2022 and December 31, 2021. As of March 31, 2022 and December 31, 2021, we have recorded a net deferred tax liability of approximately $735,000 and $723,000, respectively.

We review and update our estimated annual effective tax rate each quarter. For the three months ended March 31, 2022 and 2021, we recorded an income tax provision of $71,000 and $34,000, respectively. For the three months ended March 31, 2022 and 2021, our estimated annual effective tax rate was primarily impacted by the overall valuation allowance position which reduced the net tax impact from taxable income or loss for both periods.

Under the provisions of ASC 740, we determined that there were approximately $1,149,000 and $1,056,000 of gross unrecognized tax benefits as of March 31, 2022 and December 31, 2021, respectively. Included in the balance of unrecognized tax benefits as of March 31, 2022 and December 31, 2021 were $174,000 of tax benefits that, if recognized, would impact the effective tax rate. Also included in the balance of unrecognized tax benefits as of March 31, 2022 and December 31, 2021 were $975,000 and $882,000, respectively, of tax benefits that, if recognized, would not impact the effective tax rate due to the Company’s valuation allowance. The Company had accrued interest and penalties related to the unrecognized tax benefits of $174,000 and $170,000, which were recorded in other liabilities as of March 31, 2022 and December 31, 2021, respectively. We believe that the total amounts of unrecognized tax benefits will not significantly increase or decrease within the next 12 months.