The Research and Experimentation Tax Credit (hereinafter “RTC”) is set to expire on December 31, 2013. You are correct that the RTC was recently extended earlier this year on January 2, 2013 for a two year period through The American Taxpayer Relief Act of 2012 resulting in the RTC being retroactively reinstated to cover all of calendar year 2012 and prospectively extended to cover all of calendar year 2013. Noting, the RTC previously expired on December 31, 2011.

As a background, although passed into law in 1981 as a temporary provision within the Internal Revenue Code, the RTC has successfully been extended over the past thirty two years with only one exception. For those historically familiar with the RTC, it should be duly recalled that only once from July 1, 1995 through June 30, 1996 was there a one year “gap” from when the RTC expired and when it was reinstated without being retroactively applied since the RTC’s inception.

I fully presume that the RTC will be retroactively renewed to cover all of calendar year 2014 with newly passed legislation during the latter part of 2014. As a caveat, companies can no longer record benefits on their financial statements and tax returns for qualified research and experimentation spend commencing January 1 2014 and forward until the RTC is retroactively reinstated for this said period.

For complete coverage on the RTC, please consult my published article entitled “A Practical Guide to Identifying, Gathering, and Documenting a Sustainable Research Tax Credit Claim” utilizing the below link:

www.taxconnections.com/user_uploads/pubs/pub_15042653a376904efaa90d8b4c9dd9b2c53942866de636a74602a863739b97cdd35804d5a66124ba18e4e98ea737e241.pdf">www.taxconnections.com/user_uploads/pubs/pub_15042653a376904efaa90d8b4c9dd9b2c53942866de636a74602a863739b97cdd35804d5a66124ba18e4e98ea737e241.pdf