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.

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About the Author
Peter J. Scalise serves as the National Partner-in-Charge of the Federal Tax Credits and Incentives Practice at SAX CPAs LLP. Peter is a highly distinguished member of the Accounting Today Top 100 Influencers and has approximately thirty years of progressive Big 4 and Top 100 public accounting firm experience developing, managing, and leading large scale tax advisory practices on a regional, national, and global level.
Peter also serves as a passionate philanthropist and a member of several Boards of Directors and Boards of Advisors for local, regional, and national charities in connection with poverty and hunger alleviation; economic development; environmental conservation; health and social services; supporting veteran and military service personnel along with preserving arts and cultural programs.

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