|9 Months Ended|
Sep. 30, 2019
|Income Tax Disclosure [Abstract]|
Note 7 - Income Taxes
We recorded an income tax benefit of $51 thousand and $797 thousand for the three months ended September 30, 2019 and 2018, respectively. We recorded an income tax benefit of $111 thousand and $1,040 thousand for the nine months ended September 30, 2019 and 2018, respectively. Our effective tax rate was (3.2%) and 39.5% for the three months ended September 30, 2019 and 2018, and (9.6%) and 18.8% for the nine months ended September 30, 2019 and 2018, respectively. Our effective tax rates differed from the U.S. statutory corporate tax rate of 21% primarily because of the mix of pre-tax income or loss earned in certain jurisdictions and the change in our valuation allowance.
We record a valuation allowance when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. As of September 30, 2019, and December 31, 2018, valuation allowances of $7 million and $6.9 million, respectively have been provided against net operating loss carryforwards and other deferred tax assets. Our valuation allowance increased by $0.1 million for each of the nine months ended September 30, 2019 and 2018, respectively.
As of September 30, 2019, and December 31, 2018, we had total unrecognized tax benefits of $1.6 million, related to foreign and domestic tax positions. Of this amount, the Company estimates that $0.1 million, of the unrecognized tax benefits, if recognized, would impact the effective tax rate. A substantial portion of our liability for uncertain tax benefits is recorded as a reduction of net operating losses and tax credit carryforwards.
During the nine months ended September 30, 2019 and 2018, we had no material changes in uncertain tax positions. We record interest and penalties related to unrecognized tax benefits within the provision for income taxes. We believe that no current tax positions that have resulted in unrecognized tax benefits will significantly increase or decrease within one year. We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions.
The Internal Revenue Service completed its examination of the corporation's federal income tax returns for the years 2013-2015 resulting in no changes.
The Canadian Revenue Agency completed its examination of the corporation's 2017-2018 goods and services tax (GST) and harmonized sales tax (HST) returns, resulting in an accrued assessment of $40 thousand, which is included within other accrued expenses.
The Tax Cuts and Jobs Act (The Act,) was enacted on December 22, 2017 making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a reduction in the US federal corporate tax rate from 35% to 21%, requiring companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creating new taxes on certain foreign sourced earnings. As of December 31, 2018, we recognized income tax expense of $0.2 million related to the remeasurement of our deferred tax balance.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef