Enhanced R&D Tax Credit Provides a Path to Meaningful Tax Savings for both Small Businesses and Start-Up Companies

The Protecting Americans from Tax Hikes Act of 2015 (hereinafter the PATH Act) significantly enhanced the Federal-Level R&D Tax Credit Program (hereinafter RTC Program) under I.R.C. § 41 on a myriad of levels for both eligible small businesses and eligible start-up companies. More specifically, the enhanced RTC Program has been considerably restructured for these aforementioned eligible companies to now:

• Allow eligible small businesses (i.e., $50 million or less in gross receipts) to claim the credit against the Alternative Minimum Tax (hereinafter AMT) for tax years beginning after December 31, 2015; and

• Allow eligible start-up companies (i.e., those with less than $5 million in gross receipts and earning revenue for less than five years) to claim up to $250,000 of the credit against the company’s federal payroll tax for tax years beginning after December 31, 2015.

These aforesaid statutory changes to the RTC Program truly represent a paradigm shift for eligible small businesses and eligible start-up companies alike to not only claim the R&D Tax Credit but most importantly to be able to actually utilize the tax benefits associated with this highly advantageous RTC Program.

Please contact Peter J. Scalise, Federal Tax Credits & Incentives Practice Leader for the Americas at Prager Metis CPAs for a complimentary consultation to discuss the scope and application of the newly enhanced RTC Program and to determine the optimal methodology to properly identify, gather and document a sustainable R&D Tax Credit claim on a contemporaneous basis for your eligible Small Business and / or eligible Start-Up Company. Peter can be reached at (212) 835-2211 or at This email address is being protected from spambots. You need JavaScript enabled to view it..

A copy of the PATH Act can be downloaded for your reference at: http://waysandmeans.house.gov/wp-content/uploads/2015/12/PATH_Act_xml.pdf

Peter J. Scalise serves as the Federal Tax Credits & Incentives Practice Leader for Prager Metis CPAs, LLC a member of The Prager Metis International Group. Scalise serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (ASTP).