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The President’s Budget Proposal Attempts to Permanently Extend the Research and Experimentation Tax Credit (Guest Contributor: Peter J. Scalise - March 2014)

President Barrack Obama unveiled his $ 3.9 trillion Fiscal Year (hereinafter “FY”) 2015 budget proposal on March 4th. The President’s FY 2015 budget proposal reflects the framework set out in his 2014 State of the Union Address to promote job creation and economic growth. Clearly, the Research and Experimentation Tax Credit (hereinafter “RTC”) was a focal point of his budget as the RTC recently expired on December 31, 2013. It should be duly recalled that the RTC was originally added to the Internal Revenue Code (hereinafter “the Code”) in 1981 as a temporary provision of the Code at a time when research and experimentation based jobs were alarmingly declining in the United States and the RTC was designed to stimulate job growth and investment within the United States and its possessions (e.g., Puerto Rico and Guam).

The President’s FY 2015 budget proposal would make the RTC permanent for expenditures after December 31, 2013, and would increase the rate of the alternative simplified credit methodology. Practically speaking, by making the RTC permanent it would be highly beneficial to business entity taxpayers as it would afford greater certainty to their overall business planning (e.g., considering further and perhaps increased investment in research and development within the United States). However, identifying an appropriate revenue offset to make the provision permanent has been a recurring issue in Congress for decades. The extension of the RTC is highly probable due to the overwhelming support of the RTC on both sides of the aisle. However, making the RTC permanent is only likely if rolled into a larger tax reform bill.

Join Peter J. Scalise on March 25th from 2:00PM EDT – 3:00PM EDT for his complimentary and highly acclaimed webinar entitled “A Practical Guide to Identifying, Gathering, and Documenting a Sustainable Research Tax Credit Claim”. Please register today utilizing the subsequent link: https://www4.gotomeeting.com/register/894320791

Peter J. Scalise

Peter J. Scalise serves as the Federal Tax Credits & Incentives Practice Leader for the Americas at Prager Metis CPAs, LLC a member of The Prager Metis International Group. Peter is a highly distinguished BIG 4 Alumni Tax Practice Leader and has approximately twenty years of progressive public accounting experience developing, managing and leading multi-million dollar tax advisory practices on both a regional and national level.

Peter is also a renowned keynote speaker and an extensively published author on specialty tax incentives, tax controversy matters, and legislative updates from Capitol Hill for NAREIT, USGBC, AICPA, ASTP, NATP, ABA, AIA, TEI and serves as a volunteer member of the iShade Tax Faculty. Peter serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (“ASTP”) and is the Founding President and Chairman of The Northeastern Region Tax Roundtable, an operating division of ASTP.

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Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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