On December 18th of 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (hereinafter the “PATH Act”) that significantly enhanced the Federal-Level R&D Tax Credit Program (hereinafter “RTC Program”) under I.R.C. § 41 on a myriad of levels for both eligible “Small Businesses” and eligible “Start-Up Companies”. More specifically, the enhanced RTC Program has been considerably restructured for these aforementioned companies to now:
- Allow eligible “Small Businesses” (i.e., $50 million or less in gross receipts) to claim the credit against the Alternative Minimum Tax (hereinafter “AMT”) for tax years beginning after December 31, 2015; and
- Allow eligible “Start-Up Companies” (i.e., those with less than $5 million in gross receipts and earning revenue for less than 5 years) to claim up to $250,000 of the credit against the company’s federal payroll tax for tax years beginning after December 31, 2015.
These aforesaid statutory changes to the RTC Program truly represent a paradigm shift for eligible Small Businesses and Start-Up Companies alike to not only claim the R&D Tax Credit but most importantly to be able to actually utilize the tax benefits associated with this advantageous program.
Please contact me to discuss the scope and application of the newly enhanced RTC Program and how to properly identify, gather and document a sustainable R&D Tax Credit claim for your eligible Small Business and / or Start-Up Company.
A copy of the PATH Act can be downloaded for your reference HERE.