Have you taken advantage of California’s Research Tax Credits before? As it stands right now, this credit reduces income tax for those that paid or incurred qualified research expenses. And you might be surprised to know how many industries and businesses take advantage of the R&D tax credit every year, at both the Federal and State level. Did you know software development, construction, manufacturing, architecture and engineering businesses can qualify? Improvements that expanded the definitions to reward all types of innovation and design work were made over 10 years ago. Now, this law might be improved even further.
California Assembly Speaker Toni Atkins recently introduced a bill that would help businesses – especially small ones – by providing additional benefits to companies with smaller revenues.
As the Sacramento Business Journal explains, “Assembly Bill 437 would allow businesses with revenues of $5 million or less to cash out 10 percent of all R&D tax credits received in 2014 and 2015, and reinvest the money into research and development. Beginning in 2016, businesses would be able to cash out 15 percent of their tax credits.”
What do we think of this bill? At Miles Consulting, we encourage action from the state legislature in Sacramento that promotes business here in the Golden State. We feel that it would be a nice added benefit to the current R&D credit to include a refundable component.
We partner with Strategic Tax Solutions to deliver R&D consulting to clients – and they seem to like this new proposal as well! “AB 437 would be a big improvement to the California R&D tax credit. To convert unused credits to cash would be like injecting a shot of capital right into the arm of the entrepreneur,” said Patrick Risse, MBA, CPA, R&D Engineer Expert at Strategic Tax Solutions (STS). “Rarely do we see businesses use all their R&D tax credits.”
Stay tuned as we follow the progress of this bill, and other upcoming legislation that could affect your business! In the meantime, please contact us if you have any questions about tax credits, incentives, taxes or more. We’re happy to help!
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects, including the new California Competes Tax Credit and the California Manufacturer’s Partial Sales Tax Exemption. To learn more, contact us today at www.MilesConsultingGroup.com.
Strategic Tax Solutions (STS) is a proud strategic partner of Miles Consulting Group. STS is dedicated to helping firms reduce their California tax liabilities by utilizing R&D Tax Credits. The R&D Tax Credit can provide a reduction to past, current and future state tax liabilities. Businesses need all the help they can get to be profitable. An untapped source of revenue, oftentimes overlooked by CPAs for their clients, is the Research & Development Tax Credit, which encourages California businesses to invest in improvements that increase their competitive position in the market. This is an enormous opportunity for an immediate source of cash, as well as a reduction to past, current, and future years’ federal and state tax liabilities. We are Engineers first, CPA’s, second. We make the process of accessing R&D Tax Credit dollars straight forward, cost effective and risk free. To learn more or for a free, no risk analysis, contact STS at www.ststaxcredits.com or (415) 758-2459.
Photo Credit: Lendingmemo
