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Congress Extends the R&D Tax Credit

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BREAKING NEWS: R&D Tax Credit Extended Through 2013

Black Line Group, one of the nation’s leading providers of R&D tax credit services, is excited to share this important news with you…

As they have done consistently since 1981, Congress passed legislation as part of the American Taxpayer Relief Act of 2012 extending the Research & Development tax credit. The new law extends the incentive retroactively back to January, 1st of 2012 and through December 31, 2013.

  • This is great news that can enhance the bottom line for all manner of manufacturing and technology related companies because the tax credit is a dollar-for-dollar reduction of a company’s/shareholder’s tax liability.
  • What qualifies as research and development (R&D) is much broader than commonly realized. Activities and costs associated with developing or improving a product and/or process can potentially generate R&D tax credits.
  • Manufacturers of all kinds including those that design and develop their own products, as well as those (i.e. “job shops/contract manufacturers”) that make parts for their OEM customers, are often unknowingly engaged in research and development. Metal stampers and fabricators, precision machinists, mold builders and plastic injection molders, and tool and die-makers are examples of industries that are regularly eligible for the tax credit, but often don’t pursue the credit because they don’t understand that many of their day-to-day activities DO qualify as R&D.
  • Significant R&D also routinely takes place in software development and other technology companies, and these organizations may also benefit from the tax incentive.
  • The legislation also included minor modifications around the rules for acquisitions and Control Groups.

In addition to the federal R&D Tax Credit, many states also have state R&D Tax Credits that can provide even more tax benefit.

 

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