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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.


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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.

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