President Barrack Obama unveiled his $ 3.9 trillion Fiscal Year (hereinafter “FY”) 2015 budget proposal on March 4th. The President’s FY 2015 budget proposal reflects the framework set out in his 2014 State of the Union Address to promote job creation and economic growth. Clearly, the Research and Experimentation Tax Credit (hereinafter “RTC”) was a focal point of his budget as the RTC recently expired on December 31, 2013. It should be duly recalled that the RTC was originally added to the Internal Revenue Code (hereinafter “the Code”) in 1981 as a temporary provision of the Code at a time when research and experimentation based jobs were alarmingly declining in the United States and the RTC was designed to stimulate job growth and investment within the United States and its possessions (e.g., Puerto Rico and Guam).
The President’s FY 2015 budget proposal would make the RTC permanent for expenditures after December 31, 2013, and would increase the rate of the alternative simplified credit methodology. Practically speaking, by making the RTC permanent it would be highly beneficial to business entity taxpayers as it would afford greater certainty to their overall business planning (e.g., considering further and perhaps increased investment in research and development within the United States). However, identifying an appropriate revenue offset to make the provision permanent has been a recurring issue in Congress for decades. The extension of the RTC is highly probable due to the overwhelming support of the RTC on both sides of the aisle. However, making the RTC permanent is only likely if rolled into a larger tax reform bill.
Join Peter J. Scalise on March 25th from 2:00PM EDT – 3:00PM EDT for his complimentary and highly acclaimed webinar entitled “A Practical Guide to Identifying, Gathering, and Documenting a Sustainable Research Tax Credit Claim”. Please register today utilizing the subsequent link:
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