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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe income tax (benefit) provision was $(1.8) million, $1.4 million and $0.8 million and the effective rates were approximately 0%, 0% and 0% for the years ended December 31, 2021, 2020 and 2019, respectively. As a result of the Tax Cuts and Jobs Act (the Tax Act), the Company recorded a noncurrent receivable to reflect the refund due to the Company in future periods relating to the previously paid alternative minimum tax. The income tax benefit for the year ended December 31, 2021 is primarily due to the partial reversal of a valuation allowance as a result of the Company's recent Business Acquisition (see Note 15), partially offset by current income tax expense. While the Business Acquisition resulted in a deferred tax liability recorded under ASC 805, an adjustment to the valuation allowance is required as this deferred tax liability provides a future
reversal of a taxable temporary difference. In addition, the income tax provision for the years ended December 31, 2020 and 2019 reflected current income tax expense recorded as a result of the taxable income in certain of the Company's non-US subsidiaries and certain state income taxes.
For the years ended December 31, 2021 and 2020, the Company was also subject to foreign income taxes as a result of legal entities established for activities in Europe and Japan. The Company's loss before income taxes in the US and globally was as follows (in thousands):
 Years Ended December 31,
202120202019
US$(348,845)$(207,120)$(201,161)
Foreign(87,567)(85,568)(52,399)
Total$(436,412)$(292,688)$(253,560)
The Company's income tax provision consisted of the following (in thousands):
 Years Ended December 31,
 202120202019
Current:   
Federal$— $— $— 
State104 268 10 
Foreign1,585 1,134 767 
1,689 1,402 777 
Deferred:   
Federal(2,835)— — 
State(612)— — 
Foreign— — — 
(3,447)— — 
Total$(1,758)$1,402 $777 
The reconciliation between the federal statutory tax rates and the Company's effective tax rate is as follows:
 Years Ended December 31,
 202120202019
Statutory federal tax rate21 %21 %21 %
Permanent items(1)%— %(1)%
State income taxes, net of federal benefit4 %4 %6 %
R&D and other tax credits4 %2 %2 %
Foreign income taxes(1)%1 %1 %
Change in valuation allowance(27)%(32)%(32)%
Change in Irish trading status— %4 %3 %
Effective tax rate— %— %— %
The trading income tax rate for an Irish company is 12.5% and the non-trading income tax rate is 25%. During 2019, the Company determined that it qualifies as a non-trading company. As such, the Company’s Irish NOLs were revalued to the higher rate. Further, not all expenses incurred will result in a non-trading company loss carryforward. These changes had no impact to income tax expense as a result of the valuation allowance.
Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred tax assets and liabilities consist of the following:
As of December 31,
 20212020
Deferred tax assets:  
Net operating loss carryforwards$471,407 $377,093 
General business credits140,121 123,305 
Product license4,963 5,652 
Inventory1,417 3,767 
Lease liabilities10,641 12,421 
Stock-based compensation25,600 21,664 
Other11,520 8,550 
Deferred tax assets665,669 552,452 
Valuation allowance(587,408)(509,761)
Deferred tax assets, net of valuation allowance$78,261 $42,691 
Deferred tax liabilities:  
Intangibles$(15,214)$(9,163)
Right-of-use assets(9,840)(11,054)
Convertible debt(54,914)(22,474)
Deferred tax liabilities$(79,968)$(42,691)
  Net deferred tax liabilities$(1,707)$— 
The deferred tax assets, net of valuation allowance of $78.3 million and $42.7 million at December 31, 2021 and 2020, respectively, primarily consist of net operating loss and tax credit carryforwards for income tax purposes. Due to the Company's history of operating losses, the Company recorded a valuation allowance on its net deferred tax assets by increasing the valuation allowance by $77.6 million and $96.3 million in 2021 and 2020, respectively, as it was more likely than not that such tax benefits will not be realized. A portion of the valuation allowance increase in 2021 is charged to tax expense and the remainder was charged to equity resulting from equity transactions. As a result of the Business Acquisition (see Note 15) and the convertible debt transactions (see Note 8), there is a net deferred tax liability at December 31, 2021. This is primarily attributable to state net operating loss limitations and the timing of future reversals of taxable temporary differences.
At December 31, 2021, the Company had federal net operating loss (NOL) carryforwards for income tax purposes of approximately $1.5 billion and federal tax credit carryforwards of $143.8 million. Due to the limitation on NOLs as more fully discussed below, $1.3 billion of the NOLs are available to offset future taxable income, if any. The NOL carryovers and general business tax credits expire in various years beginning in 2022. For state tax purposes, the Company has approximately $855.0 million of NOLs in various states available to offset against future taxable income. The Company also has California and Virginia NOLs that are entirely limited due to Section 382 (as discussed below). The Company has $332.9 million of non-trading loss carryforwards for Irish tax purposes. The Company has disallowed interest expense carryover of $12.5 million which carryforward indefinitely.
The Company completed an Internal Revenue Code Section 382 (Section 382) analysis in order to determine the amount of losses that are currently available for potential offset against future taxable income, if any. It was determined that the utilization of the Company's NOL and general business tax credit carryforwards generated in tax periods up to and including December 2010 were subject to substantial limitations under Section 382 due to ownership changes that occurred at various points from the Company's original organization through December 2010. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of shareholders that own, directly or indirectly, 5% or more of a corporation's stock, in the stock of a corporation by more than 50 percentage points over a testing period (usually 3 years). Since the Company's formation in 1999, it has raised capital through the issuance of common stock on several occasions which,
combined with the purchasing shareholders' subsequent disposition of those shares, have resulted in multiple changes in ownership, as defined by Section 382. These ownership changes resulted in substantial limitations on the use of the Company's NOLs and general business tax credit carryforwards up to and including December 2010. The Company continues to track all of its NOLs and tax credit carryforwards but has provided a full valuation allowance to offset those amounts.
Law Changes
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted into law in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such an enhanced interest deductibility, repeal of the 80% limitation with respect to net operating losses arising in taxable years 2018-2020, and additional depreciation deductions related to qualified improvement property. The Company has concluded the analysis of these provisions as of year-end and the CARES Act did not have a material impact on the Company’s income taxes for 2020.
The financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50% likely of being realized upon ultimate settlement. If such unrecognized tax benefits were realized and not subject to valuation allowances, the Company would recognize a tax benefit of $7.4 million. The following table summarizes the gross amounts of unrecognized tax benefits (in thousands):
20212020
Balance as of January 1,$5,633 $4,836 
Additions related to prior period tax positions112 — 
Reductions related to prior period tax positions— (32)
Additions related to current period tax positions1,637 829 
Balance as of December 31,$7,382 $5,633 
The Company is subject to US federal and state income taxes and the statute of limitations for tax audit is open for the federal tax returns for the years ended 2018 and later, and is generally open for certain states for the years 2017 and later. The Company has incurred net operating losses since inception, except for the year ended December 31, 2009. Such loss carryforwards would be subject to audit in any tax year in which those losses are utilized, notwithstanding the year of origin.
The Company's policy is to recognize interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company has recorded no such expense. As of December 31, 2021 and 2020, the Company has recorded reserves for unrecognized income tax benefits of $7.4 million and $5.6 million, respectively. As any adjustment to the Company’s uncertain tax positions would not result in a cash tax liability, it has not recorded any accrued interest or penalties related to its uncertain tax positions. The Company does not anticipate any material changes in the amount of unrecognized tax positions over the next 12 months.