alert | Jul 30, 2015
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Research & Development Tax Credits
Since the 1980s, the Federal Research and Development tax credit has generated significant savings for companies investing in developing new and improved products and processes. To date, pursuing credits for software developed primarily for internal use was considered highly contentious. The role that computer software plays in business activities is very different today than it was when the exclusion for internal use software was enacted in 1986. Today, computer software is used in all aspects of business activity, especially in interacting with customers, vendors, and third parties. Development of such software has played a vital role in increasing the productivity of the U.S. economy and in making the U.S. more competitive globally. In response to the rapid advancement of technology and software in business, Treasury recognized the need for updated research credit regulations related to software development.