Don’t miss the opportunity to boost your bottom line through tax savings — stay tuned for news from Congress about the tax extenders!
As the end of the year rapidly approaches, Congressional haggling over renewal of the more than 50 provisions known as the tax extenders has resumed. The tax extenders include important incentives such as the Research and Development (R&D) Tax Credit, the Work Opportunity Tax Credit (WOTC), and the §179D deduction, all of which represent substantial savings for businesses each year. These provisions and the other extenders are not permanent parts of the tax code and typically expire at the end of each year, only to be renewed for a year or two. Most recently, the tax extenders lapsed on December 31, 2014.
One of the main issues over which lawmakers are currently butting heads is which, if any, tax extenders should be made permanent. Some Republicans in particular advocate taking this step for the incentives that benefit businesses, like the R&D Credit. However, their opponents are concerned that there are no measures in place that would offset the hundreds of billions of dollars that such provisions would add to the federal deficit if they were permanent. In the meantime, the recurrent lapsing and renewal of the tax extenders makes tax planning difficult for businesses as they are uncertain which incentives will be available from year to year.
One option that may determine the short-term future of the tax extenders is the bill that the Senate Finance Committee approved in July 2015. If signed into law, this measure would extend the provisions through the end of next year and would also expand some of them. For example, the bill would allow certain small businesses to apply the R&D Credit towards their AMT and payroll tax liabilities, would create a new target group under WOTC of individuals who have exhausted their unemployment benefits, and would allow tribal governments and non-profit organizations to allocate their §179D deductions to the primary designers of energy-efficient upgrades.
The actions of Congress are unpredictable, and there is a chance that lawmakers will not determine the fate of the tax extenders until after New Year. However, now is the time for businesses to begin tax planning so that they will be ready to capture the benefits of these lucrative provisions. Capital Review Group (CRG) has the expertise to help businesses maximize their tax savings despite the sometimes unpredictable nature of tax law. Contact CRG today for more information.