New rules make it easier to claim the R&D tax credit
Think only IT firms undertake software development activities that qualify for the Research and Development (R&D) tax credit? Think again. If your company develops software for use in your business, you should be aware of recent regulations issued by the Treasury Department. The new rules broaden the understanding of the types of software that qualify for the R&D tax credit. While the service industry is expected to gain the most from this change, it applies to businesses in all sectors.
The regulation revision narrowed the IRS’s definition of “Internal Use Software” (IUS), which has to meet a higher bar to qualify for the R&D tax credit. The result is that more software will now be considered outside the definition of IUS, and its development will therefore enjoy a less stringent qualification for the credit.
When applying for the R&D credit, there are more hoops to jump through when claiming the development of software the IRS considers IUS. The activity has to meet the traditional four-part test – the same as the activity related to the development of any other product – but it also faces an additional layer to the application process that is more complex and stringent. In the past, the complexity of the process has led many taxpayers to run away from even attempting to claim the R&D tax credit for their work to develop any software used in their business.
根据规定近日发布MOST，软件 不 考虑IUS如果是“出售，出租，许可 否则，销售或 给第三方。“此外，财政部添加的语言来阐明这普通法的定义，只指的是一般开发促进行政和支持职能或纳税人的贸易或商业软件。国税局定义的“普通”和本条例“行政”，并且不限于任何它们被用来运行该系统，使得金融业务管理，人力资源或支持服务。在指出软件的语言最激动人心的新规则使企业能够与第三方交互（客户）从普通法的定义排除。
Of course, the development of software that falls outside of this newer description of IUS will still have to meet the R&D tax credit’s traditional four-part test; but it will 不 be subject to the more stringent IUS rules for claiming the R&D credit, and that presents many taxpayers an opportunity.
Further resources for understanding the R&D tax Credit: