Research and Development Tax Credit Extension Passes U.S. Senate

R&D Tax CreditsOn March 10 the U.S. Senate passed by vote of 62 to 36 “The American Workers, State, and Business Tax Relief Act” (H.R. 4213) that includes a seamless one year extension of the Research and Development (R&D) Tax Credit through the end of December 31, 2010. IPC, and fellow members of the R&D Credit Coalition, lobbied Congress to pass legislation that would extend the R&D Tax Credit beyond the current expiration date of December 31, 2009. Differences in the Senate-passed version of HR 4213 will need to be reconciled with the House-passed version. The President is expected to sign the bill in to law, which will grant companies the R&D tax credit for expenditures incurred during the 2010 calendar year.

IPC continues to press Congress for a permanent R&D tax credit. R&D is critical in advancing technology, growing a business, and diversifying a product line. Important to a strong electronics industry, R&D enables businesses to develop new processes and products. The passage of a permanent R&D tax credit is imperative for the electronics industry to remain competitive, retain jobs, and ensure the competitiveness of technology-based businesses.

The R&D tax credit is designed to stimulate company R&D over time. R&D, as understood for tax purposes, is not limited to staff in white coats working in a laboratory. The electronics industry conducts many day to day activities that can qualify for R&D tax credits. Simple items, such as discarded scrap material created as a result of modifications of a fabrication process can be claimed for R&D tax credits. Ongoing research and experimentation during all phases of fabrication such as design, testing, compatibility, functionality, and ultimately production may be claimed as R&D tax credits.

R&D support varies from country to country, which has created an advantage for companies that are located in countries with significant R&D support. Industrial nations such as France, Germany, Japan, Sweden, South Korea, and the United Kingdom have considerable R&D tax credit benefits from their governments. South Korea, for example, allows a 100% deduction for R&D expenses and the United Kingdom allows for a whopping 130% deduction for R&D expenditures. Many countries also have a form of a permanent R&D tax credit allowing for long-term R&D investment. The U.S. R&D tax credit routinely expires, discouraging companies from making long-term R&D investments. The manufacturing competitiveness of the companies located in a country can be significantly improved by increased R&D government support.

IPC has been reaching out to and will continue to work with our members to influence government policies that support the entire industry. Our worldwide efforts to enhance the industry supports our policy of a fair, open and rules-based international trading system that provides for a level playing field, equitable competition, and market access for all sectors of the electronic interconnection industry. By working with governments around the world IPC strives to increase the overall robustness of the global electronic interconnect industry. The outcome resulting from all IPC’s global efforts is likely to benefit your company.

All U.S. electronic interconnect industry companies are encouraged to visit the following webpage where you can learn how to take action to pass a permanent R&D tax credit. www.ipc.org/R&D-Tax-Credit-Take-Action.

11 Comments

  1. Posted July 29, 2010 at 8:39 pm | Permalink

    Not having a permanent R&D exemption is one of the stupidest moves a government can make, and one that will continue to throttle economic growth at a time we can least afford such restrictions. It seems that all too many government officials have spent their careers legislating, rather than creating. This obviously leads to an inability to frame problems from a business perspective. To many in government see all through the eyes of a legislator, and because most have never created a job, company, or new product or process, they don’t know what it takes to make it happen.

  2. Credit Score Cures
    Posted August 16, 2010 at 8:40 pm | Permalink

    There are simple ways to help growth and you are right about the R & D exemption. But instead the government tries to tax more and stunt growth. I never will understand it.

  3. Credit Repair Report
    Posted August 17, 2010 at 10:31 am | Permalink

    If all legislators had a business background not only would businesses benefit, but also the government itself would be run much more efficiently. Efficiency leads to profit and profit leads to business expansion and that leads to more jobs.

  4. Affordable Credit Repair Specialist
    Posted August 18, 2010 at 12:36 pm | Permalink

    R&D is necessary in order to keep an economy vibrant. Permanent tax credits should be a high priority in a floundering economy.

  5. CreditBlossom
    Posted August 25, 2010 at 4:35 pm | Permalink

    It is seriously amazing that these tax credits are not permanent law. In a country bursting with the entrepreneurial spirit like America is (but might not be soon) it completely contradicts everything America stands for to not have these tax credits made permanent. In a time when unemployment, credit repair and foreclosure are at record levels, why isn’t the government looking at simple solutions like this that will in fact create jobs. It is frustrating and unnerving that they cannot see what is right in front of them. When countries like the UK and France are doing well with R&D tax credits, why aren’t we?

  6. CheckCreditScore JK
    Posted September 7, 2010 at 3:48 am | Permalink

    May this result to a positive try as there are lots of other possibilities either than this.

  7. Posted September 8, 2010 at 8:42 pm | Permalink

    with the Research and Development Tax Credit Extension, I’m sure it has many positive possibilities to advance our R&D.

  8. Posted September 14, 2010 at 7:40 am | Permalink

    White House Announces Plan to Enact a Permanent Research and Development Tax Credit

    $11 Billion = current estimated loss by high-tech industries in 2010 resulting from expired R&D tax credit

    https://blog.ipc.org/2010/09/13/white-house-announces-plan-to-enact-a-permanent-research-and-development-tax-credit/

  9. Credit Bad
    Posted October 16, 2010 at 10:24 pm | Permalink

    Yes, I agree that this is a favourable move for our research and development sectors. The government will gain a lot more than what it lost in taxes.

  10. Posted December 28, 2010 at 2:07 pm | Permalink

    Research and Development Tax Credits and Enhanced Bonus Depreciation Legislation Enacted into Law

    Electronics companies will benefit from the fruition of IPC efforts this year to support important tax provisions to benefit U.S. electronics manufacturers. The “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010,” more commonly known as the “Tax Cuts Bill,” seamlessly reinstates research and development (R&D) tax credits for 2010 and extends them through 2011. Additionally, the bill provides a 100-percent bonus depreciation for investments placed in service after September 8, 2010 and through December 31, 2011. To learn more about bonus depreciation and R&D tax credits please visit http://www.ipc.org/bonus-depreciation or http://www.ipc.org/rd-tax-credit.

    The R&D tax credit, critical in enabling electronics companies to compete globally, encourages companies to conduct R&D in the U.S by allowing businesses to apply for a dollar for dollar reduction of tax for qualified expenditures. Qualifying R&D activities, as understood for tax purposes, are not limited to revolutionary breakthroughs in manufacturing. Electronics companies conduct many day-to-day activities that can qualify for R&D tax credits such as claiming discarded scrap material created as a result of modifications of a fabrication process. Business can receive R&D tax credits not simply for the final product, but all the changes, variations, and experiments involved in getting to their final result. The R&D tax credit assists companies conducting R&D by reducing their after-tax costs.

    Throughout 2010, IPC has been urging members of Congress to enact legislation reinstating and permanently extending R&D tax credits. To amplify our efforts, IPC joined forces with the R&D Credit Coalition to urge Congress to pass the extension of tax provisions including the R&D tax credit. Lead by the IPC Government Relations (GR) Committee, IPC and its members met with legislators during events such as IPC Capitol Hill Day and at plant tours hosted by IPC member facilities. IPC and its members also delivered letters to members of Congress urging them to enact legislation seamlessly extending R&D tax credits through 2010 and for as long as possible.

    The enhanced bonus depreciation benefit enacted into law expands the current benefit. Under existing bonus depreciation law, businesses are allowed to recover 50 percent of the cost of capital expenditures over time according to a depreciation schedule. The law extends and temporarily increases the bonus depreciation benefit to 100 percent for investments placed in service after September 8, 2010 and through December 31, 2011. For investments placed in service after December 31, 2011 and through December 31, 2012, the bill extends the current 50 percent bonus depreciation.
    IPC and its members have long advocated for enhanced bonus depreciation benefits to assist electronics companies. Because of the rapid advances in electronics manufacturing, companies must continually invest in new equipment in order to remain competitive. Bonus depreciation is especially helpful in tough economic times because businesses can continue to purchase new equipment and write off the investment at a faster rate. Enactment of enhanced bonus depreciation can help companies to purchase much needed equipment that will allow them to remain globally competitive.

  11. TaxRefundGuarantee
    Posted January 4, 2011 at 2:09 pm | Permalink

    I am seriously going to start using all of that! Thank you so much, I am not even kidding! There is nothing that I hate more than coming up with content all the time to barely keep our real estate blog up. It’s just so time consuming – so thanks again!


Post a Comment

Required fields are marked *

*
*

%d bloggers like this: