Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for (benefit from) income taxes for the three months ended September 30, 2020 and 2019, was $0.4 million and $(0.1) million, respectively, and was $0.8 million and $(3.1) million for the nine months ended September 30, 2020 and 2019, respectively. The provision for (benefit from) income taxes for the three and nine months ended September 30, 2020 and 2019 consisted primarily of state minimum taxes and foreign income taxes. The provision for (benefit from) income taxes for the nine months ended September 30, 2019 also included a one-time benefit from the release of valuation allowance as a result of the ConnectFirst acquisition. For the three and nine months ended September 30, 2020 and 2019, the provision for income taxes differed from the U.S. federal statutory rate primarily due to state and foreign taxes currently payable. Due to the Connect First acquisition in January 2019, a deferred tax liability was established for the book-tax basis difference related to identifiable acquired intangibles. The net deferred tax liability from acquisitions is considered an additional source of income to support the realizability of the Company's pre-existing deferred tax asset, and as a result the Company released a portion of the valuation allowance that was established in the previous year and recorded a one-time tax benefit of $3.2 million for the nine months ended September 30, 2019. The Company realized no benefit for the current year losses due to a full valuation allowance against the U.S. and foreign net deferred tax assets.

The realization of tax benefits of net deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence, the Company does not believe it is more likely than not that the net deferred tax assets will be realizable. Accordingly, the Company has provided a full valuation allowance against the entire domestic and the majority of the foreign net deferred tax assets as of September 30, 2020 and December 31, 2019. The Company intends to maintain the full valuation allowance on the U.S. net deferred tax assets until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance.

During the three and nine months ended September 30, 2020, there were no material changes to the total amount of unrecognized tax benefits.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was passed into law and amended portions of relevant tax laws. The CARES Act did not have any significant impact on the provision for income taxes for the three and nine months ended September 30, 2020. The Company will continue to monitor future guidance issued regarding the CARES Act.