House Votes To Reinstate The Research And Experimentation Tax Credit

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.

In accordance with Circular 230 Disclosure

Peter J. Scalise serves as the Federal Tax Credits & Incentives Practice Leader for Prager Metis CPAs, LLC a member of The Prager Metis International Group. Peter is a highly distinguished BIG 4 Alumni Tax Practice Leader and has approximately twenty years of progressive public accounting experience developing, managing and leading multi-million dollar tax advisory practices on both a regional and national level.

Peter is a highly acclaimed thought leader in the fields of accounting and taxation with deep subject matter expertise in connection to designing, implementing and defending sustainable methodologies for specialty tax incentives including, but not limited to, research tax incentives; orphan drug credits; therapeutic discovery credits; accounting methods and periods; energy tax incentives in connection to green building envelope efficiency and benchmarking, solar energy, bio energies, fuel cells, wind turbines, micro turbines, and geothermal systems; and comprehensive fixed asset analysis incorporating principles of construction tax planning, cost segregation analysis and the final treasury regulations governing tangible property.

Peter is a renowned keynote speaker and an extensively published author on specialty tax incentives, tax controversy matters, and legislative updates from Capitol Hill for NAREIT, AGRION, USGBC, AICPA, ASTP, NATP, ABA, AIA, and TEI. Peter serves as a member of the Tax Faculty for CPAacademy, iShade and TaxConnections University (“TCU”). Peter serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (“ASTP”) and is the Founding President and Chairman of The Northeastern Region Tax Roundtable.

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