
	Fiscal Year Ended January 31,
	2021		2020		2019
Current:
Federal	$	—	$	—	$	—
State	46		72		81
International	1,480		481		1,406
	$	1,526	$	553	$	1,487
Deferred:
Federal	$	—	$	(29)	$	—
State	—		—		—
International	347		(83)		420
Income tax provision	$	1,873	$	441	$	1,907

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Our deferred income tax assets and liabilities consisted of the following (in thousands):


	As of January 31,
	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	108,390	$	94,805
Tax credit carryforwards	9,849		8,525
Allowances and other	12,727		12,095
Depreciation and amortization	1,417		906
Operating lease liability	15,627		16,358
Total deferred tax assets	$	148,010	$	132,689
Deferred tax liabilities:
Deferred commissions	$	(9,002)	$	(7,707)
Intangibles	(3,057)		(3,004)
Operating lease right-of-use asset	(11,718)		(12,639)
Total deferred tax liabilities	(23,777)		(23,350)
Valuation allowance	(126,149)		(110,908)
Net deferred tax liabilities	$	(1,916)	$	(1,569)

We have assessed, based on available evidence, both positive and negative, it is more likely than not that the deferred tax assets will not be utilized, such that a valuation allowance has been recorded. The valuation allowance increased by $15.2 million and $23.9 million, respectively, for fiscal 2021 and 2020.

As of January 31, 2021, we had U.S. federal and state net operating loss carryforwards of approximately $426.5 million and $286.2 million, respectively, available to offset future taxable income. As of January 31, 2020, we had U.S. federal and state net operating loss carryforwards of approximately $366.4 million and $269.9 million,

respectively, available to offset future taxable income. If not utilized, these carryforward losses will expire in various amounts for federal and state tax purposes beginning in 2028. In addition, Zuora has approximately $188.4 million of federal net operating loss carryforwards that arose after the 2017 tax year, which are available to reduce future federal taxable income, if any, over an indefinite period. The utilization of those net operating loss carryforwards is limited to 80% of taxable income in any given year.

We have approximately $8.4 million and $10.5 million of federal and state research and development tax credits, respectively, available to offset future taxes as of January 31, 2021, and approximately $7.4 million and $8.9 million of federal and state research and development tax credits, respectively, available to offset future taxes as of January 31, 2020. If not utilized, the federal credits will begin to expire in 2031. California state research and development tax credits may be carried forward indefinitely.

Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the "ownership change" limitations provided by Section 382 and 383 of the Internal Revenue Code of 1986, as amended, and other similar state provisions. Any annual limitation may result in the expiration of net operation loss and tax credit carryforwards before utilization.

Furthermore, under the Tax Reform Act, although the treatment of tax losses generated in taxable years ending before December 31, 2017 has generally not changed, tax losses generated in taxable years beginning after December 31, 2017 may be utilized to offset no more than 80% of taxable income annually. This change may require us to pay federal income taxes in future years despite generating a loss for federal income tax purposes in the current and prior years.

On March 27, 2020, the CARES Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. Changes in tax laws or rates are accounted for in the period of enactment. Under the CARES Act, we deferred payment of $3.6 million in employer FICA taxes related to the period from March 27, 2020 through December 31, 2020, of which 50% is due for payment on December 31, 2021 and the remaining 50% is due on December 31, 2022. The income tax provisions of the CARES Act did not have a significant impact on our current taxes, deferred taxes, and uncertain tax positions.

The amount of accumulated foreign earnings of our foreign subsidiaries was immaterial as of January 31, 2021. If our foreign earnings were repatriated, additional tax expense might result. Any additional taxes associated with such repatriation would be immaterial.


	Fiscal Year Ended January 31,
	2021		2020	2019
	Amount			Amount		Amount
Federal income tax benefit at statutory rates	$	(14,973)		$	(17,420)	$	(14,875)
State income taxes, net of effect of federal	(2,072)			(3,859)		(3,337)
Permanent differences	718			1,174		1,242
Federal and state R&D credits	(1,325)			(1,235)		(1,029)
Impact from international operations	600			(31)		1,340

Stock-based compensation and other	3,685			(3,427)		(476)
Change in valuation allowance	15,240			25,239		19,042
Income tax provision	$	1,873		$	441	$	1,907

We are required to inventory, evaluate, and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of such positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. As of January 31, 2021, our total gross unrecognized tax benefits were $9.4 million exclusive of interest and penalties described below. As of January 31, 2020, our total gross unrecognized tax benefits were $8.1 million exclusive of interest and penalties described below. Because of our valuation allowance position, $0.7 million of unrecognized tax benefits, if recognized, would reduce the effective tax rate in a future period. We do not expect that the total amounts of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.


	Fiscal Year Ended January 31,
	2021		2020		2019
Gross amount of unrecognized tax benefits as of the beginning of the period	$	8,070	$	6,588	$	5,918
Increase for tax positions related to prior years	—		—		8
Decrease for tax positions related to prior years	(5)		(18)		(366)
Increase for tax positions related to the current year	1,320		1,500		1,028
Gross amount of unrecognized tax benefits as of the end of the period	$	9,385	$	8,070	$	6,588

We file tax returns in the U.S. federal and various state and foreign jurisdictions. All U.S. federal and state jurisdictions remain subject to examination by tax authorities due to the carryforward of unused net operating losses and research and development credits. In addition, tax years starting from 2007 are subject to examination.