DALLAS, Dec. 17, 2014 /PRNewswire/ -- On December 16, 2014, the Senate voted to renew a collection of expired tax provisions commonly referred to as "tax extenders." The House approved the same bill earlier this month. We expect the President to sign the full bill before Christmas. It includes a one-year extension of one of the most important tax incentives for U.S. businesses—the Research and Experimentation Tax Credit ("R&E Credit") commonly known as the R&D Tax Credit. The R&E Credit expired on December 31, 2013, but the credit has a history of extension, expiration, and renewal. Since it was introduced in 1981, the credit has been extended 16 times and has been allowed to expire nine times. When it has expired, the credit has almost always been retroactively reinstated to provide continued benefits to taxpayers.
The frequent legislative deliberations around the R&E Credit have caused many taxpayer headaches. The last time the credit was renewed followed an expiration of the credit at the end of 2011. Congress debated retroactive renewal all the way through December 31, 2012, before passing the bill that extended the credit through the end of 2013. The late passage of the legislation meant that President Obama could not sign the bill into law until January 2, 2013. For taxpayers with a December 31st year end, that meant that the benefit of the R&E Credit could not be reported in their 2012 financial statements. Instead, the benefit had to be recognized in the following year.
Taxpayers have long waited for the R&E Credit to become a permanent part of the Internal Revenue Code. Congress debated this measure in 2014, but midterm politics prevented the initiative from moving forward. The Tax Increase Prevention Act of 2014 extends the current credit regime for qualified research expenses incurred through December 31, 2014. This is good news for all taxpayers interested in booking a financial statement benefit for the R&E Credit for their 2014 year end. Larger debates about a permanent credit and/or reforms to the credit calculation await the new Congress in 2015.
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a three-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 1,900 professionals and associates serves over 9,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.
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