Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

Note 12: Income Taxes

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

	2022			2021
Current:
Federal	$	688		$	632
State		172			186
Foreign		142			109
Total Current		1,002			927
Deferred:
Federal		(202	)		(40	)
State		(37	)		(7	)
Foreign		(39	)		(59	)
Total Deferred		(278	)		(106	)
Total expense for income taxes	$	724		$	821

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

	2022						2021
	Amount			Percentage			Amount			Percentage
Federal statutory tax rate	$	558			21.0	%	$	864			21.0	%
State tax rate		114			4.2	%		139			3.4	%
Permanent difference – stock-based compensation		25			1.0	%		(55	)		(1.3	)%
Permanent difference – other		38			1.4	%		(83	)		(2.0	)%
Foreign tax credit generated		(96	)		(3.6	)%		(55	)		(1.3	)%
Tax on foreign earnings – tax reform		96			3.6	%		55			1.3	%
Foreign rate differential		15			0.6	%		13			0.3	%
FDII Deduction		(26	)		(1.0	)%		(57	)		(1.3	)%
Total	$	724			27.2	%	$	821			20.1	%

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

	2022			2021			Change
Assets:
Deferred revenue	$	29		$	89		$	(60	)
Allowance for doubtful accounts		185			152			33
Stock options		151			88			63
Transaction costs		41			44			(3	)
IRC Section 174 capitalized costs		216			—			216
ROU lease liability		427			496			(69	)
Other		10			48			(38	)
Total deferred tax asset		1,059			917			142
Liabilities
Prepaid expenses		—			(5	)		5
Basis difference in fixed assets		(155	)		(174	)		19
Capitalized software		(35	)		(50	)		15
ROU Assets		(393	)		(464	)		71
Purchase of intangibles		(1,048	)		(400	)		(648	)
Total deferred tax liability		(1,631	)		(1,093	)		(538	)
Total net deferred tax asset / (liability)	$	(572	)	$	(176	)	$	(396	)

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, 2022 or December 31, 2021. 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, 2022.

Undistributed earnings of the Company are insignificant as of December 31, 2022. 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, 2021, 2020 and 2019 are open to audit by federal and state taxing authorities.