On Tuesday, July 21, the U.S. Senate Finance Committee cleared tax extenders legislation that, if passed by Congress, would extend and expand the R&D Tax Credit and the Section 179D tax deduction for energy-efficient commercial buildings. The legislation would retroactively extend the R&D Tax Credit and 179D deduction for two years, meaning both incentives would expire on December 31, 2016. We at alliantgroup applaud the proposed extenders bill as the extension and expansion of both incentives amount to a major victory for our nation’s small and mid-sized businesses.
“Yesterday’s news from the Senate Finance Committee on tax extenders is a welcome breath of fresh air for businesses and tax practitioners alike,” said former Senior Counsel to the U.S. Senate Finance Committee and alliantgroup National Managing Director, Dean Zerbe. “Many of the provisions, particularly those related to the R&D Tax Credit and the 179D deduction, would greatly aid small and medium businesses. This legislation also provides additional assurance that Congress is serious about dealing with the extenders issue earlier this year rather than later.”
Expansion of the R&D Tax Credit
Among the bill’s stronger provisions, the legislation would allow companies to claim the R&D credit against their Alternative Minimum Tax (AMT)—thereby removing a major barrier to small and mid-sized businesses claiming the credit in the past—and would essentially make the credit refundable for small businesses, allowing companies that have existed less than five years and have less than $5 million in annual gross receipts to take a credit of up to $250,000 against payroll taxes paid on employee wages.
Expansion of Section 179D
With respect to expansions for 179D, the bill would now allow buildings owned by charities and tribal governments to allocate the tax deductions to the designers and builders that are making the energy-efficient enhancements (just as government entities currently do).
“By clearing the Finance Committee, Congress has taken the initial steps to making tax extenders a reality, adding much needed stability for the small and mid-sized companies that are depending on these incentives to add valuable dollars back into their business,” said alliantgroup CEO, Dhaval Jadav. “Today is no doubt a great day for U.S. businesses and their CPAs.”
Contact us today for more information on the R&D Tax Credit, 179D and what this proposed legislation could mean for your business.