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Tax Extenders Clear the Senate Finance Committee With Expansions for the R&D Tax Credit and Section 179D

HOUSTON, TX. JULY 22, 2015 – On Tuesday, July 21, the U.S. Senate Finance Committee cleared tax extenders legislation that, if passed by Congress, would extend and expand both the R&D Tax Credit and the Section 179D tax deduction for energy-efficient commercial buildings. alliantgroup applauds the proposed extenders bill, declaring both the extension and expansion of these tax incentives a major victory for small and mid-sized businesses.

“Yesterday’s news from the Senate Finance Committee on tax extenders is a welcome breath of fresh air for businesses and tax practitioners alike,” said former Senior Counsel to the U.S. Senate Finance Committee and alliantgroup National Managing Director, Dean Zerbe. “Many of the provisions, particularly those related to the R&D Tax Credit and the 179D deduction, would greatly aid small and medium businesses. This legislation also provides additional assurance that Congress is serious about dealing with the extenders issue earlier this year rather than later.”

In its entirety, the “tax extenders” bill is a piece of legislation that would extend over 50 expiring provisions of the tax code. In years past, prior extenders packages have provided non-permanent extensions of these provisions, and the current tax extenders bill would be no different in offering a temporary fix. Last year’s package was passed in December 2014, providing a one year retroactive extension for nearly all expiring provisions.

However, the initial delay and the scramble to pass the bill before the extenders were set to expire at the end of last year led to Congress stripping many of the stronger aspects of the bill; key among these being specific expansions to the R&D Tax Credit and the 179D tax deduction. In this year’s version, those expansions have been added back into the extenders package.

These include provisions that would allow companies to claim the R&D credit against their Alternative Minimum Tax (AMT)—a huge barrier to small and mid-sized businesses trying to claim the credit in the past—and another that would make the R&D Tax Credit refundable for small businesses, allowing companies that have existed less than five years and have less than $5 million in annual gross receipts to take a credit of up to $250,000 against payroll taxes paid on employee wages.

With respect to 179D, the deduction would be expanded so that buildings owned by charities and tribal governments can allocate the tax deductions to the designers and builders that are making the energy-efficient enhancements (just as government entities are currently allowed to do). Both the R&D credit and 179D would be extended retroactively for two years, meaning both incentives would expire on December 31, 2016.

“The expansion of the R&D credit and 179D is great news for businesses,” said alliantgroup Senior Managing Director, Rizwan Virani. “As alliantgroup is the American Institute of Architects’ (AIA) exclusive partner for Section 179D and other tax services, I’ve seen firsthand the importance of both of these incentives in putting money back into the pocket of our most innovative builders and designers.”

“By clearing the Finance Committee, Congress has taken the initial steps to making tax extenders a reality, adding much needed stability for the small and mid-sized companies that are depending on these incentives to add valuable dollars back into their business,” said alliantgroup CEO, Dhaval Jadav. “Today is no doubt a great day for U.S. businesses and their CPAs.”

alliantgroup’s mission is one of education and awareness—we exist to help industry organizations, U.S. businesses and the CPA firms that advise them, take full advantage of all federal and state tax credits, incentives and deductions available to them. Our government has legislated these powerful incentive programs to help businesses grow and successfully compete both in the U.S. and abroad. We are proud to have helped over 20,000 businesses claim more than $5 billion in tax incentives! alliantgroup’s headquarters is in Houston, Texas, with offices across the country including New York, Boston, Chicago, Orange County, Sacramento, Orlando, Indianapolis and Washington, D.C.