On the same day H.R. 880, the American Research and Competitiveness Act of 2015 was passed by the House, so was H.R. 1806, the America Competes Reauthorization Act, in a 217-205 vote.

The America Competes Reauthorization Act of 2015 would provide nearly $33 billion in funding for federal scientific research between 2016 and 2020, to be dispersed between the National Science Foundation, the Office of Science and Technology Policy, the National Institute of Standards and Technology and specific offices at the U.S. Department of Energy.

Opponents of the bill labeled it “anti-science” and criticized its reductions in approved funding for climate change and other research endeavors. Advocates saw the bill in a very different light. Lamar Smith (R-TX), House Science, Space and Technology Committee Chairman, described the bill as a “pro-science, fiscally responsible bill that sets America on a path to remain the world’s leader in innovation,” according to the American Institute of Physics. 

President Obama is siding with the opponents on this one. On May 18, the White House released a statement saying it “strongly opposes House passage of H.R.1806…which would undermine critical investments in science, technology and research. The Administration believes that H.R. 1806 would be damaging to the Administration’s actions to move American competitiveness, innovation, and job growth forward through a world-leading science, technology, and innovation enterprise. If the President were presented with H.R. 1806, his senior advisors would recommend that he veto the bill.”

The COMPETES Act was received in the Senate on May 21, 2015, read twice and referred to the Committee on Commerce, Science and Transportation.

A specialty chemicals group publicly applauded the House last week for passing the American Research and Competitiveness Act, and are now calling on the Senate to take the same action.

The Society of Chemical Manufacturers and Affiliates (SOCMA) is one of many associations backing The American Research and Competitiveness Act which would make the Research and Development Tax Credit permanent and raise the credit rate.

SOCMA says about one-fifth of their members’ workforce is involved in R&D and one-tenth of the companies are dedicated to research.

“By nature, specialty chemical manufacturing is innovative, and many SOCMA members rely on the R&D tax credit to help them remain competitive in the global marketplace,” said William Allmond, SOCMA’s senior lobbyist, according to Chem.Info.

The American Research and Competitiveness Act passed the House with a total vote of 274-145 which included 37 yes’ from Democrats. SOCMA and other supporters are worried that the bill won’t have the same outcome once it hits the Senate floor, or the President’s desk, if it even makes it there.

“If we’re going to get away from deficit spending, you’ve got to pay for things,” said Representative Xavier Becerra (D-CA). “Don’t act like you can do these things for free.”

Last year, two attempts to make the R&D credit permanent were shot down once they reached the Senate. SOCMA, along with many companies whose business relies on R&D are pleading for a different outcome this year.

After taking a long, hard look at America’s Research and Development Tax Credit, Congress realized that it was due for a much-needed makeover, and 2015 is the year to do it.

In February of 2015, the bipartisan COMPETE Act was introduced by Senators Tom Carper (R-DE) and Pat Toomey (R-PA) to drastically improve the R&D Tax Credit.

On May 20, 2015 the House passed the American Research and Competitiveness Act of 2015, which increases the R&D tax credit rate and makes the credit permanent.

That same day, the House received the most recently proposed improvement to the credit, the Domestic Research Enhancement Act of 2015, which modernizes the R&D Tax Credit to make certain contract research eligible.

Pharmaceutical, biotech and medical device companies can be heard cheering since contract research plays such a critical part in the development of new devices within these industries.

Another major supporter of the Domestic Research Enhancement Act of 2015 is the Association of Clinical Research Organizations (ACRO). ACRO represents companies that provide a range of specialized services that support the development of new pharmaceuticals, biologics and medical devices.

On May 21, 2015, Jamie Macdonald, the Chairman of ACRO and CEO of INC Research, issued the following statement in support of the Domestic Research Enhancement Act of 2015.

“ACRO commends Representatives Pat Meehan (R-PA), George Holding (R-NC) and G.K. Butterfield (D-NC) for co-sponsoring the Domestic Research Enhancement Act of 2015. This important piece of bipartisan legislation will help ensure that the United States remains a leader in medical innovation and encourages employment in the high-wage research sector. Pennsylvania and North Carolina remain the leading states for contract clinical research with more than 13,000 employees combined. By enabling contract research organizations to capture a portion of the R&D tax credit that is currently abandoned, this legislation will enable the United States to remain competitive globally. Similar provisions are included in the bi-partisan COMPETE Act introduced earlier this year by Senators Tom Carper and Pat Toomey. We look forward to enactment this year.”

U.S. Congressman Kevin Brady recently wrote a piece for The Woodlands Villager as a guest columnist titled, “Keeping America Safe, Strong and Innovative.”

Brady begins his article by describing the real world we live in today and the everyday threats we face from the terrorism that exists around us.

“In Congress, my most important constitutional duty is the defense of our country and the Americans who live within it. The world is a dangerous place these days. This is no time to allow our military or intelligence to be hollowed out. In the next few weeks, Congress will consider measures to ensure our military and intelligence warriors have what it takes to keep our families and communities safe.”

Two weeks ago, a bipartisan bill was passed by the Senate that  requires Congress to vote on any nuclear deal with Iran proposed by the President before further action occurs.

The House will be voting on the bill next, along with Brady’s  newly proposed legislation to “restore America’s leadership in innovation.”

Brady’s bill will make the Research and Development tax credit modernized and permanent, promoting R&D investment in America instead of overseas.

Brady says the legislation is necessary to “create jobs, breakthrough technologies and economic growth here in the U.S.”

“America is rapidly falling behind our global competitors in research — especially China, which could surpass us by the end of the decade. Unless we act to encourage more U.S. research, our economy will suffer while middle-class families and talented college graduates will see jobs and opportunity lost to foreign countries.”

Businesses all over the United States, from Ohio to California, are winning when it comes to recent changes for R&D tax credits. The tax credits are considered to be one of the most generous offerings for businesses in America, and thanks to the Obama administration’s proposal, things are about to get even sweeter. This could mean that there’s some excellent news in store for small- to medium-sized businesses looking to spend on technological developments and research in the near future.

Good News for Multiple US Businesses

The new rules are in the hands of the US Treasury Department. These rules are expected to remove many of the restrictions that are currently in place in the US tax code. Many small businesses could take advantage of the millions of dollars in savings that the new rules open. Some of the expected advantages include:

• The ability to backdate tax claims by years
• Companies being able to sell prototypes as end products to their customers
• Opening the R&D tax credit to a vast range of companies that are not currently eligible under the current laws

According to the administration officials, the changes are only designed to clarify the current rules, helping to remove some of the confusion that can be experienced when making claims. They state that the changes will not increase the number of eligible businesses that could apply for the 30-year-old credit. However, many tax lawyers see the new rules differently. They see them as a positive move that could be a great giveaway to businesses due to the fact that the IRS is under so much pressure to become more accommodating.

Could R&D Tax Credit Be Here to Stay?

President Obama is keen on the R&D tax credit, and he has vowed to expand the current system and make it a permanent law, rather than one at risk of being removed from the US tax code. In fact, the R&D tax credit was one of the many tax breaks that expired on December 31, 2013, but it will once again continue to be revived as it has been so many times in the past since it was set up in 1981.

Could You Make a Claim?

If you are a business investing in research and development, you may be eligible for the R&D tax credit. If you’re spending on innovation, researching technological products and processes with the aim of creating something new, or improving on current products and processes, you may be able to reduce your tax bill quite substantially. Contact our team of specialist R&D tax advisors to discover if you’re eligible and learn how we can assist you throughout the process.