Members of the former R&D Credit Coalition announced the rebranding and expanded focus of the group’s efforts. Going forward, the coalition of more than 65 member companies and associations will be known simply as the 'R&D Coalition' as their objectives have expanded to include policy issues beyond the Research and Development Tax Credit. Most notably, the coalition hopes to convince policymakers to undo a specific change in U.S. tax policy included in the Tax Cut and Jobs Act, which was signed into law in December 2017.
'Most of our members were supportive of the broader effort to reform our nation's tax code,' said Sharon Heck, Vice President and Director of Tax at Intel, which chairs the R&D Coalition. 'But, from the perspective of promoting R&D investments, the new law could hinder these investments in the long-run.'
Specifically, the Tax Cuts and Jobs Act amended Section 174 of the Internal Revenue Code, which allows businesses to deduct qualified research and development expenses from their taxable income. Since 1954, when Section 174 was enacted, companies have been able to deduct all such expenditures in the same year they were incurred. Starting in 2022, the new tax law will require businesses to amortize, or gradually write off, R&D expenses over a five-year period, significantly diminishing the near-term value of research investments.
'Businesses want to invest in the United States,' Heck added. 'The members of this coalition all want to develop new products, create new jobs, and expand their work right here at home. These new amortization rules ' which aren't used in any other industrialized country ' will make those kinds of investments far less attractive. Ultimately, this hurts innovation and opportunities for job growth.'
In addition to advocating for changes to the Tax Cuts and Jobs Act's amortization requirements, the newly-branded R&D Coalition plans to continue supporting a fair and robust R&D Tax Credit and making policymakers aware of the overall importance of research and development investments to the U.S. economy.
Members of the R&D Coalition include businesses and associations in all 50 states.