The P.A.T.H. Act

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The Protecting Americans from Tax Hikes (P.A.T.H.) Act was enacted by the Obama Administration in 2015. There were multiple key provisions that directly affected the R&D tax credit in positive ways for taxpayers. 

R&D Tax Credit Becomes Permanent

For the first time in history, the R&D tax credit became a permanent part of the tax code allowing for proper tax planning by corporations and individual taxpayers without the uncertainty surrounding the biannual cycle of renewal prior to the P.A.T.H. Act. 

Small Business Payroll Tax Offset

Small businesses with no more than five (5) years of historical gross receipts and current year gross receipts at less than $5 million, were given the ability to elect to apply their R&D tax credit against their quarterly payroll tax liability. This benefit cannot come from an amended claim. Excess credits carryforward as payroll tax offset credits for a period of 20 years. 

Small Business AMT

Small business corporations, partnerships, and sole proprietorships that are non-publicly traded whose gross receipts, on average, were less than $50 million for the prior three (3) years were eligible to offset Alternative Minimum Tax (AMT).

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