On Friday, May 9th The U.S. House of Representatives voted 274-131 to reinstate the Research and Experimentation Tax Credit (hereinafter “RTC”) under § 41 of the Code which recently expired on December 31, 2013.
As a background, the RTC was first enacted in 1981 into the Code as a temporary provision at a time when research and development based jobs were alarmingly declining throughout the United States (hereinafter “U.S.”) due to U.S. based companies moving these jobs overseas. Lawmakers stated the lapse-and-revive cycle of the past 33 years has prevented companies from relying on it and thwarted its incentive effect. “Businesses can’t grow and invest when the tax code is riddled with instability and uncertainty,” Ways and Means Committee Chairman Dave Camp, a Michigan Republican, proclaimed on the House floor yesterday. “We’ve fallen far behind. Other countries are moving past the United States.”
The bill now heads back to the Senate, where lawmakers are taking a different approach. The differences between the House and Senate may take weeks, if not months, to resolve. Noting, instead of separate votes to make individual tax benefits permanent, the Senate Finance Committee last month backed a single measure extending the RTC and dozens of other tax extenders through the end of 2015. The House bill is scheduled to reach the Senate floor this week and I will continue to provide legislative updates from the Hill.
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