IRS Enacts Coons-Roberts Provision to Make R&D Tax Credit Accessible to Small Businesses

Press Release

The IRS has enacted a provision championed by U.S. Senator Chris Coons (D-Del.), leader of the Senate's Manufacturing Jobs for America initiative, and Senator Pat Roberts (R-Kan.) that will make the valuable research and development tax credit more accessible to small businesses. The IRS announced a change to regulations this week that will for the first time allow small companies to claim the Alternative Simplified Credit, a simpler version of the R&D tax credit, on amended tax returns. Senators Coons and Roberts first proposed this change in the bipartisan Innovators Job Creation Act, introduced in January.

"Research and development are the lifeblood of innovation, and many of today's most successful innovations are coming from the small business world," Senator Coons said. "Our tax code should encourage job-creating R&D, but until now, IRS regulations prevented many small companies from claiming the most user-friendly version of the R&D tax credit. This simple change will help thousands of small manufacturers access the capital they need to invest in innovation, grow their businesses, and create good jobs. I'm grateful to Senator Roberts for his partnership on the Innovators Job Creation Act, and look forward to working with him to enact the other important provisions of this bill."

"I am glad the IRS agrees with me that small businesses, the most dynamic part of our economy, should be able to take fuller advantage of the Research and Development Tax Credit," Senator Roberts said. "The sensible change in the IRS' regulations -- a change I have long pushed for -- will provide funds to allow innovative small business owners to create new jobs, expand businesses and keep businesses growing."

Congress created the Alternative Simplified Credit (ASC) in 2006 to provide businesses with a simpler version of the complex R&D tax credit. The ASC is especially beneficial to small companies, who often lack the resources and expertise to perform the complicated calculations required to claim the traditional R&D credit. The ASC was intended to make these calculations easier, but IRS regulations previously barred its use on amended tax returns.

Senators Coons and Roberts introduced the bipartisan Innovators Job Creation Act in January to allow businesses to claim the ASC on amended returns and extend access to valuable R&D tax credits to small businesses and startups. The Innovators Job Creation Act is cosponsored by Senators Mike Enzi (R-Wyo.) and Chuck Schumer (D-N.Y.).

This legislation has been endorsed nationally by more than three-dozen organizations and companies, including the Information Technology & Innovation Foundation (ITIF), BIO, the Association for Manufacturing Technology, CompTIA, TechVoice, the American Small Manufacturers Coalition, the Telecommunications Industry Association, Plug In America, American Institute of Architects, and the Technology Councils of North America.

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