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The Research & Experimentation Tax Credit

Last week, the House Committee on Small Business held a hearing on "Helping Small Business Innovators through the Research and Experimentation Tax Credit." Led by the Subcommittee on Contracting and Technology, members listened to the experience of technology entrepreneurs in utilizing this tool, commonly known as the R&D tax credit.

All witnesses stressed two problems: the uncertainty surrounding the permanence of the credit and the administrative burden that the credit’s complexity imposes. They expressed that these barriers prevent small business from using the credit. Witnesses also mentioned other barriers, such as the net operating loss limitation in the credit’s provisions (Scott Ferros, VP and CIO of BlackHawk) and the credit’s interactions with the Alternative Minimum Tax affecting business decisions (Bart Heenan, CEO of Morphix Technologies).