Earlier this month, the White House had threatened to veto to the budget deal that was a bipartisan effort, which would have put business tax credits on hold. The R&D tax credits was part of what is known as "extenders" in D.C. speak - tax breaks that are typically renewed every year or two, but have bipartisan backing. Now that budget has been passed, the R&D tax credits have been "extended" retroactively to the beginning of the year.
Of course it would have been nice to know that the R&D tax credits would be extended earlier in the year so molders and moldmakers could have planned throughout the year. But it seems that Congress truly believes that hindsight is 20/20.
Ever since Congress implemented the R&D tax credit for manufacturers to promote research and development, innovation and jobs, it's been temporary. Every year, Congress must vote on whether or not to extend this credit and in some cases, have to make it retroactive to the previous year if the vote was not taken in the previous year due to gridlock and other congressional wrangling.
Earlier this year, it looked as if that might change. On Friday, May 9, 2014, the House voted to make permanent the R&D tax credit, which expired Dec. 31, 2013. The bill passed by a vote of 274 to 131, with 62 Democrats joining nearly every Republican in support of this tax credit.
If you thought sounded too good to be true, you were right. Two weeks later the Senate shot down the bill that would have made the R&D tax credits permanent. So here we are less than two weeks until the end of the year and they've extended the R&D tax credits retroactively through 2014. Can you imagine if manufacturers did business like this!
But, hey, we'll take what we can get when we can get it. Mold manufacturers and molders do a lot of R&D for their OEM customers, so it's worth looking into this R&D tax credit and keeping good records. I've written about this before with the help of Black Line Group, and it seems to be worth the effort to get the tax break.
Scott Schmidt of Black Line Group, noted, "The definition of Research and Development (R&D) is much broader than people realize. Activities and costs associated with developing and/or improving a product or process can potentially generate R&D tax credits. Manufacturers of all kinds that make parts for their larger OEM customers often do not know or believe that they are doing R&D."
Check it out; find out what you need to do to qualify for these R&D tax credits.