Tax News & Views Strengthening The R&D Credit Roundup

July 17, 2020

Manufacturers Hope R&D Tax Break Is Revived in Next Relief Bill – David Hood, Bloomberg Tax. “U.S. manufacturers are pushing lawmakers to reverse a provision in the 2017 tax law that will force companies to write down research and development expenditures starting in 2022.”

“The 2017 tax law removed the option of expensing R&D costs in the same taxable year and will require companies to write down those deductions over five years, or 15 years for costs incurred outside the U.S. The change was part of lawmakers’ efforts to address revenue issues stemming from the law’s massive corporate tax cut.

An EY study commissioned by the R&D Coalition found that the provision would decrease R&D spending by $4.1 billion in the first five years. The coalition groups large companies like Intel Corp., Microsoft Corp., Raytheon, and Northrop Grumman Corp. to advocate for R&D issues.”

The EY study notes the that amortizing R&D expenditures over 5 years could lead to 23,400 jobs being lost. Further, R&D incentives in Europe have been increasing causing U.S. companies to shift R&D overseas.

R&D credits can provide substantial economic benefits. Eide Bailly’s R&D Tax Incentives team can help.  


Trump Goes All-In on Payroll Tax Cut Despite Skeptical Congress – Jonathan Curry, Tax Notes($). “Congress must include a payroll tax holiday in the next coronavirus relief package or it won’t make it past President Trump’s desk, according to the White House.”

Partnership form being redesigned for 2021 – Dave Strausfeld, J.D. Journal of Accountancy. “The IRS has proposed adding two new schedules to Form 1065, U.S. Return of Partnership Income, to help standardize the format in which partnerships report international tax items, beginning with tax year 2021, according to a July 14 press release.”

“The proposed changes are intended to simplify the process for partners to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits, while also increasing the IRS’s efficiency in verifying taxpayer compliance. The changes generally would not affect domestic partnerships with no foreign activities or foreign partners to report.”

New Partnership Forms Are Another Arrow in IRS’s Audit Quiver - Eric Yauch, Tax Notes($).


Is There an Official List of Expenses That Can Be Reimbursed by a Health FSA, HRA, or HSA? Thomson Reuters Tax Blog 

“Unfortunately, no government publication provides this exact information. IRS Publication 502—Medical and Dental Expenses (Pub. 502) comes the closest, but it should be used with caution. This is because Pub. 502 is written largely to help taxpayers determine what medical expenses can be deducted on their income tax returns; it is not meant to address the tax-favored programs.”

The Cannabis Tax Experiment – Lewis Koski, Forbes. “As more state lawmakers across the country consider opening new, legal cannabis markets, new tax systems to support them must also be developed.”

IRS Debunks Five Tax Refund Myths – Robert W. Wood, Forbes. “The day after tax day, the IRS is quick to remind everyone there is no secret way to find out exactly when a refund will be issued.”

5 myths the article lays out:

  1. Getting a refund this year means there’s no need to adjust withholding for 2020
  2. Calling the IRS or a tax professional will provide a better refund date.
  3. Ordering a tax transcript is a secret way to get a refund date.
  4. The “Where’s my refund?” tool is wrong because there’s no deposit date yet.
  5. Something is wrong when the refund amount is less than expected.

Alabama sales tax holiday this weekend despite COVID-19 - Kay Bell, Don’t Mess With Taxes. “Four broad areas of consumer goods qualify for Alabama's sales tax savings this weekend. They are clothing priced at $100 or less; books priced at $30 or less; school supplies at $50 or less; and computers and software priced at $750 or less.”


Today in History

"Disneyland, Walt Disney’s metropolis of nostalgia, fantasy and futurism, opens on July 17, 1955. The $17 million theme park was built on 160 acres of former orange groves in Anaheim, California, and soon brought in staggering profits"


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