Business & Finance
News
6/30/2004
01:20 PM
50%
50%

IT Vendors Push For Quick Extension Of Expiring R&D Tax Credit

Both houses of Congress have OK'd legislation to extend the credit, but a conference committee has yet to iron out the differences in the bills.

Businesses in the United States will no longer be eligible to receive tax credits for expenses related to research and develop as of midnight Wednesday, when the federal R&D tax credit is scheduled to expire.

Both houses of Congress have passed legislation that would extend the tax credit until Dec. 31, 2005, but differences in each chamber's version of the bill need to be resolved before final legislation can be presented to the White House for the president's signature. Congressional aides say a House-Senate conference committee has not yet been appointed to consider the bills.

IT industry lobbyists say a lengthy delay in enacting the extension could create problems for hardware and software makers. "As we get later into the year, it creates more uncertainty and makes it more difficult for businesses to budget research projects for the following year," says Bartlett Cleland, VP and tax counsel at the Information Technology Association of America, an industry group of IT vendors, including IBM, Hewlett-Packard, and Microsoft. Cleland says it's not yet clear whether the legislation would apply retroactively to July 1 when enacted.

Under the existing plan, businesses can claim a tax credit for up to 20% of spending increases related to research and development conducted within the United States. Cleland says an ITAA survey revealed that 50% of the group's members would have moved at least some of the R&D efforts they conduct in the United States--projects ranging in cost from $10 million to $100 million--offshore had the credit not been in place.

The House version of the extension is contained in the American Jobs Creation Act, which passed on June 17. The Senate version is included in the Jumpstart Our Business Strength Act, approved in May. President Bush has been pushing for a permanent R&D tax credit but hasn't mustered sufficient support in Congress. Democratic presidential candidate Sen. John Kerry has said he favors extending the tax credit.

Comment  | 
Print  | 
More Insights
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest, Dec. 9, 2014
Apps will make or break the tablet as a work device, but don't shortchange critical factors related to hardware, security, peripherals, and integration.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.