Washington, D.C. – U.S. Senators Chris Coons (D-Del.) and Pat Roberts (R-Kan.) yesterday introduced the Support Small Business R&D Act, legislation that will help startups and small businesses take advantage of the newly available research and development (R&D) tax credit.
Specifically, the bill would require the Small Business Administration and Internal Revenue Service to partner to develop educational and training materials for entrepreneurs who invest in research and could be eligible to use the R&D credit to offset their expenses. These materials would be provided to SBA programs around the country and business development entities that partner with SBA programs, such as universities, business accelerators, and business incubators.
At the end of 2015, Congress passed legislation that not only made the R&D credit permanent but also expanded the credit to allow more startups and small businesses to access it. The inspiration to expand the credit was drawn from a proposal by Senators Coons and Roberts known as the Innovators Job Creation Act. However, despite these changes to the credit, many small businesses do not have the information necessary to take advantage of this opportunity to offset their research costs. The Support Small Business R&D Act is designed to address that knowledge gap.
“By including our proposal to expand the R&D credit to startups and small businesses in bipartisan tax legislation, Congress took a big step towards encouraging our small companies to innovate,” said Senator Coons. “But our responsibility does not end now that this proposal is law. I am proud to work with Senator Roberts to make sure that our startups and small businesses have the tools they need to take advantage of the R&D credit and continue to invest in advanced research.”
“The goal of the 2015 legislation is to make sure that small businesses and innovative startups, the major job creators in our economy, are able to easily access the R&D credit,” said Senator Roberts. “The R&D credit is complicated, so it is critical that small businesses and startups interested in the R&D credit have access to basic assistance from the Small Business Administration and the IRS to put them on the right track to claiming the credit. The bill we introduce today directs the federal government – at no new cost to taxpayers – to help our job creators to utilize the R&D credit, which will provide long-term benefit to the economy.”
“We welcomed legislation passed by Congress in 2015 that expanded the R&D credit to provide access to startups and small businesses,”said Stephen S. Tang, Ph.D, MBA, President, University City Science Center. “The challenge now is to raise awareness in the startup community. We believe the Support Small Business R&D Act is an important step towards encouraging the SBA and IRS, in partnership with business incubators like the Science Center, to help educate the startup community about the R&D credit. This critical legislation introduced by Senators Coons and Roberts will help us explain the benefits of the R&D credit to the startups that are driving economic activity in the Philadelphia and Delaware region.”
“Recent changes to the R&D tax credit greatly expand access to the credit for new businesses, but not nearly enough of them are aware of this; ITIF endorses the Support Small Business R&D Act, proposed by Sens. Coons and Roberts, which would require the Small Business Administration and IRS to expand knowledge sharing and training on these instruments, and provide a report to Congress of their progress,” said Dr. Robert D. Atkinson, President, ITIF.
“New businesses are the primary source of net new jobs in the U.S. economy,” said Jason Wiens, Policy Director, Ewing Marion Kauffman Foundation. “With entrepreneurs focused on building successful companies and creating jobs, it shouldn’t be a surprise that many entrepreneurs are unaware of government resources made available to them or how to benefit from this assistance. More needs to be done to educate founders and small business owners about all the ways government is trying to help.”
Senator Coons is a member of the Small Business Committee and the Ranking Member on the Financial Services and General Government Subcommittee on Appropriations, which oversees funding for the SBA and IRS. Coons is a strong advocate for policies to encourage innovation and has long been a champion of the R&D tax credit as a key incentive for investment in advanced research. Details about his work on the R&D tax credit can be found on his website here.