Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Note Income Taxes

Note 11: Income Taxes

The provision for income taxes consisted of the following components for the years ended December 31 (in 000’s):

	2021			2020
Current:
Federal	$	632		$	307
State		186			84
Foreign		109			21
Total Current		927			412
Deferred:
Federal		(40	)		283
State		(7	)		50
Foreign		(59	)		(21	)
Total Deferred		(106	)		312
Total expense for income taxes	$	821		$	724

Reconciliation between the statutory rate and the effective tax rate is as follows on December 31 (in 000’s, except percentages):

	2021						2020
	Amount			Percentage			Amount			Percentage
Federal statutory tax rate	$	864			21.0	%	$	594			21.0	%
State tax rate		139			3.4	%		117			4.1	%
Permanent difference - stock-based compensation		(55	)		(1.3	)%		29			1.1	%
Permanent difference - other		(83	)		(2.0	)%		16			0.5	%
Foreign tax credit generated		(55	)		(1.3	)%		(15	)		(0.5	)%
Tax on foreign earnings - tax reform		55			1.3	%		17			0.6	%
Foreign rate differential		13			0.3	%		(2	)		(0.1	)%
FDII Deduction		(57	)		(1.3	)%		(32	)		(1.1	)%
Total	$	821			20.1	%	$	724			25.6	%

Components of net deferred income tax assets are as follows on December 31 (in 000’s):

	2021			2020			Change
Assets:
Deferred revenue	$	89		$	24		$	65
Allowance for doubtful accounts		152			149			3
Stock options		88			108			(20	)
Transaction costs		44			46			(2	)
Other		80			138			(58	)
Total deferred tax asset		453			465			(12	)
Liabilities
Prepaid expenses		(5	)		(15	)		10
Basis difference in fixed assets		(174	)		(188	)		14
Capitalized software		(50	)		-			(50	)
Purchase of intangibles		(400	)		(459	)		59
Total deferred tax liability		(629	)		(662	)		33
Total net deferred tax asset / (liability)	$	(176	)	$	(197	)	$	21

                As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. It has been determined that is more likely than not that the Company’s deferred tax assets are able to be realized based on future positive earnings and reversal of existing temporary differences.

The Company had no unrecognized tax benefits as of December 31, 2021 or December 31, 2020. Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. There are no accruals for interest and penalties on December 31, 2021.

Undistributed earnings of the Company are insignificant as of December 31, 2021. With the enactment of the 2017 Act, the Company does not consider any of its foreign earnings as indefinitely reinvested.

The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2020, 2019 and 2018 are open to audit by federal and state taxing authorities.