'Fiscal Cliff' Negotiations Could Impact Extension of R&E Tax Credit

KPMG's David Culp Available for Comment

Dec 21, 2012, 16:27 ET from KPMG LLP

NEW YORK, Dec. 21, 2012 /PRNewswire/ -- As lawmakers continue to seek a plan to avert the year-end 'fiscal cliff,' KPMG LLP believes that companies should be monitoring the future of many business tax credits, including a decision on whether the currently expired Research and Experimentation (R&E) Tax Credit -- available to companies incurring research and development expenses in the United States -- will be extended, retroactive to Jan. 1, 2012.

"Businesses need to be alert to potential changes to the R&E Tax Credit by organizing their 2012 expenditures to allow for timely computation of the credit, in the event an announcement is made on the credit's extension," said David Culp, a director in KPMG's Washington National Tax practice, who has been following the issue closely.

Reinstatement legislation on the credit, which expired on Dec. 31, 2011, would ensure that companies are entitled to a tax benefit for their research and development investment back to January 1, 2012. Taking advantage of the credit requires companies to commit to taking action to compute and substantiate a credit claim. Companies that have held off on credit substantiation procedures may need to expedite information-gathering for activities earlier in 2012.

"As companies pull together information to support their claims for a 2012 R&E Tax Credit, they must also ensure the quality of their information gathering," Culp said. "Ensuring that the company's 2012 R&E Credit-claim is well documented and accurate is a key to successful filing."

Culp added: "Although there is no guarantee, companies should be encouraged by the prospects for renewal, given Congress's reinstatement of the R&E Tax Credit 14 times in the past." 

For breaking commentary from David Culp or another KPMG tax leader, as the future of the R&E Tax Credit is determined, please contact Deborah Primiano at 201-401-6378 or dprimiano@kpmg.com.


KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 152,000 people, including more than 8,600 partners, in 156 countries.


Deborah Primiano/Bridget Carroll



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