|12 Months Ended|
Jan. 31, 2023
|Income Tax Disclosure [Abstract]|
12. Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. The Company has closed out an audit with the Internal Revenue Service for its U.S. income tax returns through fiscal 2013; however, the taxing authorities will still have the ability to review the propriety of certain tax
attributes created in closed years if such tax attributes are utilized in an open tax year, such as federal research and development credit carryovers.
The components of loss from operations before income taxes are as follows:
The components of the income tax (benefit) provision from operations are as follows:
The Company recorded an income tax benefit of less than $0.2 million for the year ended January 31, 2023. The Company’s effective tax rate in fiscal 2023, and in future periods, may fluctuate as a result of changes in jurisdictional forecasts where losses cannot be benefitted due to the existence of valuation allowances on deferred tax assets, changes in actual results versus estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof.
The income tax benefit was computed using the federal statutory income tax rate and average state statutory rates, net of related federal benefits. The provision differs from the Company’s effective tax rate primarily due to the following:
The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES
Act allowed the Company to accelerate the refund of its AMT credit from fiscal 2022 to fiscal 2021. The refund was received in the fourth quarter of fiscal 2021.
As a result of the Tax Cuts and Jobs Act enacted in 2017, foreign earnings may now generally be repatriated back to the U.S. without incurring U.S. federal income tax. Historically, the Company has asserted the intention to indefinitely invest the cumulative undistributed earnings of the Company's foreign subsidiaries with the exception of Ireland. The Company declared cash dividends from the subsidiaries to the parent of approximately $0.0 million and $1.8 million in fiscal 2023 and 2022, respectively.
The components of deferred income taxes are as follows:
At January 31, 2023, the Company had federal, state and foreign net operating loss carry forwards of $131.0 million, $6.9 million and $1.9 million respectively, which can be used to offset future tax liabilities and expire at various dates beginning in fiscal 2023. The Company performs an analysis under Section 382 of the Internal Revenue Code of 1986, as amended, analysis on a periodic basis and utilization of these net operating loss carry forwards may be limited pursuant to provisions of the respective local jurisdiction. In addition, at January 31, 2023, the Company had federal and state research and development credit carry forwards of $3.0 million and $2.0 million, respectively. The Company has foreign tax credit carry forwards of $1.2 million, which are available to reduce future federal regular income taxes. These credits expire at various dates beginning in fiscal 2023.
The Company reviews the adequacy of the valuation allowance for deferred tax assets on a quarterly basis. The Company has evaluated the positive and negative evidence bearing upon the ability to realize the Company's deferred tax assets and have established a valuation allowance of $45.0 million for such assets, which are comprised principally of net operating loss carry forwards, research and development credits, deferred revenue, and stock-based compensation. If the Company generates pre-tax income in the future, some portion or all of the valuation allowance could be reversed and a corresponding increase in net income would be reported in future periods. The valuation allowance increased by less than $0.1 million for the year ended January 31, 2023 and increases by $1.5 million for the fiscal year ended January 31, 2022.
A reconciliation of gross unrecognized tax benefits is as follows:
As of January 31, 2023, the Company had $3.2 million of unrecognized tax benefits, a portion of which are classified as long term and included in long-term liabilities on the Company's consolidated balance sheets. The Company recognized interest and penalties related to unrecognized tax benefits in the income tax benefit on the Company's consolidated statements of operations and comprehensive loss. As of January 31, 2023 and 2022, total gross interest accrued was $0.0 million and $0.1 million, respectively. Included in the balance of unrecognized tax benefits as of January 31, 2023 and January 31, 2022 are $0.0 million and $0.1 million, respectively for both of the periods of tax benefits that, if recognized, would affect the effective tax rate.
When accounting for uncertain tax positions, the impact of uncertain tax positions is recognized in the financial statements if they are more likely than not of being sustained upon examination, based on the technical merits of the position. The Company has determined that it has uncertain tax positions as of January 31, 2023 and 2022 that to the extent recognized, are recorded through the consolidated statements of operations and comprehensive loss. The Company does not expect any change to this determination in the next twelve months.
No definition available.
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://www.xbrl.org/2003/role/disclosureRef