Introduction
On October 3rd of 2016, the Internal Revenue Service (hereinafter “the Service”) issued Final Treasury Regulations setting forth guidance on research and development efforts in connection to Internal Use Software (hereinafter “IUS”) for purposes of claiming the Research & Development Tax Credit (hereinafter “RTC”) under I.R.C. § 41.
History of the R&D Tax Credit Program
The Federal-Level Research and Development Tax Credit Program (hereinafter “RTCP” or “RTC”) was originally enacted into the Internal Revenue Code (hereinafter “the Code”) through the Economic Recovery Tax Act of 1981 as a temporary provision of the Code at a time when research and development jobs were significantly declining throughout the United States. Notably, the RTCP was introduced into the Code to encourage business entity taxpayers to invest in Read more
On December 15th of 2015, House Speaker Paul Ryan, R-Wis., announced to the Republican lawmakers during a conference meeting that negotiators have reached an agreement in principle on a tax-extenders package worth approximately $800 billion. In addition, an agreement was also reached that would fund the federal government through September 30th of 2016. The bills are expected to arrive on the House floor as early as December 17th with the Senate consideration expected before Congress adjourns for recess.
As a synopsis, the proposed tax-extenders package called for making permanent a number of tax extenders equally split 50-50 between business entities and individuals. Under the proposal, the tax-extenders package would make permanent the Research and Development Tax Credit Program; I.R.C. § 179 Read more
On September 22 of 2015, Senate Democrats introduced a comprehensive energy reform bill entitled “The American Energy Innovation Act” that would reform current energy policy and enhance over forty tax incentives subsidizing energy production.
The legislation addresses the need for the creation of new energy based jobs in connection to both infrastructure advancements and technological innovation. As a synopsis, the bill includes programs essential to renewed economic growth in the energy sector that empower consumers; modernize infrastructure; cut carbon pollution and waste; invest in clean energy; and support research and development initiatives.
The tax aspects of the legislation would modify several energy tax incentives already in Read more
The Broad Tax Extenders Coalition (hereinafter “the Coalition”) are recommending to lawmakers on Capitol Hill to take immediate action on over fifty tax provisions that previously expired on December 31st of 2014. In a recent letter dated September 10th of 2015, the Coalition comprised of over two thousand organizations informed members of Congress that failure to timely extend the tax provisions will result in a significant increase in tax liabilities on both business entities as well as individuals.
As a background it should be duly recalled that previously on July 21st of 2015th, the Senate Finance Committee overwhelmingly passed a tax extenders bill with a bipartisan vote of 23 to 3 that planned to extend over fifty previously expired tax provisions for a two year period (e.g., retroactively to cover all of calendar year 2015 and prospectively to cover Read more
Join Ron Wainwright at TaxConnections Internet Tax Summit as he presents information on the “Patent Innovation Box”, Tuesday, September 22nd at 11:00AM (PDT).
Ron will be discussing how this was designed to encourage companies from the United States to make their profits and establish their Research and Development Facilities specifically in the European Union.
Hear more from Ron Wainwright about the U.S. adopting the “Patent Innovation Box” at the Internet Tax Summit. (See Video Introduction Below) Read more
The ease of listing your home, vacation property or a room on Airbnb or similar web platform has turned a lot of individuals into landlords. We hear about these landlords being subject to local taxes such as the transient occupancy tax (hotel tax) and business license tax, but what about state and/or local sales tax?
In some jurisdictions, sales tax applies. So that is one more thing to check. (And don’t forget that one of the first things to check is if the local jurisdiction even allows short-term rentals!)
What do you think? Read more
On July 21st of 2015, the Senate Finance Committee overwhelmingly passed a tax extenders bill with a bipartisan vote of 23 to 3 that plans to extend over 50 previously expired tax provisions for a two year period (e.g., retroactively to cover all of calendar year 2015 and prospectively to cover all of calendar year 2016).
The bipartisan tax extenders package includes provisions to assist both individuals and business entities alike. Just a few of the more popular tax provisions outlined within this bill include, but are not limited to:
• The Research & Experimentation Tax Credit Program;
• The I.R.C. § 179D Energy Tax Deduction for Building Envelope Efficiency; Read more
On Wednesday, May 20th The House of Representatives passed H.R. 880 entitled the “American Research and Competitiveness Act of 2015” by a vote of 274-145 and H.R. 1806 entitled the “America Competes Reauthorization Act” by a vote of 217-205. The legislation would make permanent the Research and Experimentation Tax Credit and authorize approximately $33 billion in funding for federal scientific research and research grants between fiscal years 2016 through 2020. This funding would be divided amongst the National Science Foundation; the Office of Science and Technology Policy; the National Institute of Standards and Technology; along with select offices at the U.S. Department of Energy. While the bill does not lift the existing funding level for the agencies, it will nonetheless help to promote “fundamental discovery science” by Read more
On September 22nd, The House of Representatives passed, by a vote of 253 to 173, HR 4 entitled “The Jobs for America Act of 2014” (hereinafter “JAA”) , which would simplify and make permanent the I.R.C. § 41 Research and Experimentation Tax Credit (hereinafter “RTC”) on a retroactive basis. JAA also includes several other provisions previously approved by the House of Representatives to extend retroactively and on a permanent basis bonus depreciation; I.R.C. § 179 expensing; select S corporation provisions; and to repeal retroactively the medical device excise tax.
Among other changes to RTC, the bill would increase the Alternative Simplified Credit methodology (hereinafter “ASC”) rate to 20% and eliminate the “Regular” methodology option under Section A of Form 6765. This action by the House of Representatives is part Read more
On Monday, July 21 of 2014, the Department of Treasury and Internal Revenue Service (hereinafter the “Service”) issued Final Treasury Regulations under T.D. 9680 to amend the definition of research and experimental expenditures pursuant to I.R.C. § 174. These Final Treasury Regulations finalized and replaced the previously issued Proposed Treasury Regulations that were published on September 6, 2013. As a reminder, Treasury Regulations provide the official interpretations of the Internal Revenue Code by the Department of Treasury and have the force and effect of law. The most common forms of Treasury Regulations include: Read more
On June 2, 2014, The Department of Treasury announced that modified treasury regulations (e.g., TD 9666) will enable companies to claim the Research and Experimentation Tax Credit (hereinafter “RTC”) utilizing the Alternative Simplified Credit (hereinafter “ASC”) methodology on amended tax returns. This represents a true paradigm shift from the previously issued set of treasury regulations which only allowed companies to take the RTC utilizing the ASC on originally filed tax returns.
This paradigm shift was made possible through the bipartisan support on both sides of the aisles in Congress including, but not limited to, Coons (D-DE), Cornyn (R-TX),Grassley (R-IA), Hatch (R-UT) Klobuchar (D-MN) Roberts (R-KS), Schumer (D-NY) and Wyden (D-OR), Brady (R-TX), Camp (R-MI), Gerlach (R-PA), Jenkins (R-KS), Read more
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