Tax committee leaders identify technical correction to research credit

Technical correction to research credit

A letter to the Secretary of the Treasury and the IRS Commissioner, from the chairmen and ranking members of the Senate Finance Committee and the House Ways and Means Committee, identify a technical correction for the research credit provision, enacted in late December 2015.

Related content

In their letter (dated January 27, 2016), the tax committee leaders wrote of their concern that Treasury and the IRS carry out the congressional intent with respect to the research tax credit provision enacted as part of the "Protecting Americans from Tax Hikes Act of 2015" (PATH Act).

The subject provision permanently extended and modified the research credit. However, as noted in the letter, the provision could be read as “…having reinstated the alternative incremental research credit of section 41(c)(4)” which was terminated for tax years beginning after 2008. The letter concludes:

 

By making the present-law research credit permanent, Congress did not intend to reinstate the previously terminated alternative incremental research credit. We intend to introduce technical corrections legislation to strike section 41(c)(4) and the last sentence of section 41(c)(5), effective as if included in the PATH Act. Until such technical correction is enacted, we strongly encourage you to be mindful of the fact that there was no Congressional intent to reinstate the alternative incremental research credit.

© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG's new digital platform