
	Years ended December 31,
	2020		2019		2018
Income before income tax expense:
Domestic	$	427	$	12,814	$	5,577
Foreign	8,183		9,555		9,186
Total income before income tax expense	$	8,610	$	22,369	$	14,763

Income tax expense:
Current:
Federal	$	492	$	2,634	$	388
State and local	333		586		378
Foreign	2,868		5,046		3,285
Total current	3,693		8,266		4,051
Deferred:
Federal	(1,500)		(338)		813
State and local	(353)		(99)		258
Foreign	(298)		(649)		(195)
Total deferred	(2,151)		(1,086)		876
Total income tax expense	$	1,542	$	7,180	$	4,927

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. The sources and tax effects of the differences are as follows:


	December 31,
	2020		2019		2018
Federal income tax rate	21.0	%	21.0	%	21.0	%
State and local taxes net of federal benefit	(4.4)		3.0		1.9
Sale of subsidiary	(23.0)		—		—
Valuation allowance	20.0		6.3		0.4
Foreign tax credits	(10.0)		(5.0)		—
Foreign tax rate differential	5.0		4.1		1.8
Permanent differences	4.9		3.5		2.7
Other	3.7		(1.0)		2.2
Global Intangible Low-taxed Income	0.7		0.2		1.5
Tax Cuts and Jobs Act of 2017	—		—		1.9
Effective tax rate	17.9	%	32.1	%	33.4	%

The Tax Cuts and Jobs Act of 2017 created a requirement that Global Intangible Low-Taxed Income (GILTI) earned by a controlled foreign corporation (CFC) must be included in the gross income of the U.S. shareholder. The FASB Staff Q&A Topic 740, No. 5, “Accounting for Global Intangible Low-Taxed Income” states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis difference expected to reverse as GILTI in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a current period expense when incurred.

Income tax expense was $1.5 million for the year ended December 31, 2020 compared to $7.2 million for the year ended December 31, 2019. Our effective income tax rate was 17.9% and 32.1% for the years ended December 31, 2020 and 2019, respectively. The decrease in the effective income tax rate compared to 2019 is primarily due to a the tax effect of the sale of a subsidiary, partially offset by an increase in valuation allowance on deferred tax assets.

On March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") to provide certain relief as a result of the COVID-19 pandemic. The CARES Act, among other things, includes various income and payroll tax provisions, as well as provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, and modification to the net interest deduction limits. Tax payment deferrals provided for under the Cares Act resulted in liabilities for deferred payroll tax payments and other deferred tax payments under other government relief programs in different regions of the world where we operate, totaled $10.4 million as of December 31, 2020, of which approximately $7.0 million is included in accounts payable and accrued expenses and $3.4 million is in other noncurrent liabilities. We continue to monitor any effects that may result from the CARES Act.

As of December 31, 2020 and 2019, we had no uncertain tax positions reflected on our consolidated balance sheet. The Company files income tax returns in U.S. federal, state and local jurisdictions, and various non-U.S. jurisdictions, and is subject to audit by tax authorities in those jurisdictions. Tax years 2017 through 2020 remain open to examination by these tax jurisdictions, and earlier years remain open to examination in certain of these jurisdictions which have longer statutes of limitations.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in thousands):


	December 31,
	2020		2019
Deferred tax assets:
Allowance for credit losses	$	1,201	$	291
Accrued liabilities and other	2,860		2,066
Stock-based compensation expense	807		297
Net federal, state and foreign operating loss carryforwards	3,147		2,825
Other	305		—
Foreign tax credit carryforwards	1,295		1,379
Deferred tax assets	9,615		6,858
Valuation allowance on deferred tax assets	(5,081)		(4,025)
Deferred tax liabilities:
Other	—		182
Intangible assets, property and equipment, principally due to difference in depreciation and amortization	7,137		8,969
Net deferred tax liabilities	$	(2,603)	$	(6,318)

As of December 31, 2020, we had foreign and U.S. state net operating loss carryforwards of $12.1 million for tax purposes, which will be available to offset future taxable income. If not used, these carryforwards will expire beginning in 2021.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets may not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon these factors, management placed a valuation allowance of $5.1 million and $4.0 million as of the years ended December 31, 2020 and 2019, respectively, against certain deferred tax assets, including net operating loss carryforwards, due to the uncertainty of future profitability in foreign jurisdictions. Management believes it is more likely than not that the Company will realize the benefits of the remaining deferred tax assets.

The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest these earnings, as well as the capital invested in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur any significant, additional taxes related to such amounts. The Company has not provided for any additional outside basis difference inherent in its foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable.