US Tech Groups Call For Renewal Of Research And Development Tax Credit

by Glen Shapiro, LawAndTax-News.com, New York

04 January 2006

US technology and manufacturing groups, including the Information Technology Association of America (ITAA) last week urged Congress to pass a strengthened research and development tax credit when it reconvenes later this month, and suggested that lawmakers missed a critical opportunity to bolster a recovering economy by failing to act before the credit lapsed on December 31.

"We call on Congress to pass a strengthened research and development credit that allows for the creation of the alternative simplified credit as soon as possible in 2006," announced ITAA vice president Stephanie Childs, adding that:

"Allowing the credit to lapse weakens the industry even as it faces increasing innovation and competition from around the world. Technology companies of all stripes factor this tax credit into their plans to conduct research and development in the United States and to create high quality jobs."

Congress adjourned for the year in December without renewing the credit, which provides assistance to nearly 16,000 companies in IT and other industries to increase investment in research done in the United States, by providing a break on up to 10 percent of R&D spending.

Following the credit's expiry, technology firms and other US businesses will be unable to assume the credit in forecasting project costs or reporting financial results.

Although both the House and Senate intend to extend the R&D credit, there are reportedly no plans to permanently enact it, due to the likely loss of revenue which would impact on long-term budget projections.

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