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Can Your Company Cash in on the Modified R&D Credit?

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The modification of the R&D credit, enacted as part of the 2015 PATH ACT, creates a major cash saving opportunity for startup and small businesses. Qualifying companies can put the credit to use towards their payroll tax liabilities and keep the cash where it matters most – invested in their business.

For tax years beginning on or after January 1, 2016, Qualified Small Businesses (“QSBs”) will be able to elect to apply the R&D credit towards their payroll tax liability rather than their income tax. As a result, the benefit of the R&D credit that was once limited to profitable companies can produce substantial cash savings in the technology startup and life sciences industry, where early-stage tax losses are prevalent and the R&D credit typically goes unused.

So, do you meet the standards to qualify as a QSB? Are you a corporation (including an S corporation) or partnership:

(a) with gross receipts of less than $5 million for the current taxable year, and
(b) that did not have gross receipts for any taxable year that occurs before the five taxable year period ending with the current taxable year?

If you answered yes to the above questions, and have research and development expenses, you may be eligible to apply the R&D credit towards your payroll tax liability, up to an amount of $250,000!

Contact Withum today to find out how to take advantage of this opportunity.

Christine Mellusi, CPA Christine Mellusi, CPA
T (973) 898 9494


Christine Mellusi, CPA Tyler Tedesco, CPA
T (973) 898 9494


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To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.


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