When Did R&D Tax Credits Start?

The R&D Tax Credit was promulgated in 1981. Its original intent was to bolster the American manufacturing sector against growing global competition. Since then, the credit has enjoyed strong bipartisan support. As a result, the credit has been enhanced several times to favor American businesses. Most recently, the 2015 Protection Against Tax Hikes (PATH) Act implemented a provision to allow start-up companies to offset their payroll taxes using R&D credits. Previously, the credit could only be used to offset income tax liabilities. This has served the burgeoning technology industry well over the last few years. However, as recently as 2021, the IRS has also implemented additional reporting requirements to ensure taxpayers are properly claiming R&D credits. Specifically, the IRS now requires taxpayers claiming R&D credits for refunds on prior tax returns (you can look back to the previous three years of tax returns to claim refunds via the R&D credit) to produce more detailed reporting on the expenses and “business components” that are generating credits. Endeavor Advisors’ process includes a comprehensive Final Report to satisfy these requirements.