WASHINGTON – U.S. Senators Chris Coons (D-Del.) and Pat Roberts (R-Kan.) as well as United States Congressmen Mike Kelly (R-PA) and Ron Kind (D-WI) today introduced the Support Small Business R&D Act, legislation that will help startups and small businesses take advantage of the 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 and Congressmen Kelly and Kind 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.”
“Small businesses are the most important innovators in our economy. They produce 16 times more patents per employee than their larger counterparts, and they employ more than half of America’s private sector workforce,”said Congressman Kelly. “Our legislation will help more innovative start-ups get off the ground, create new jobs, and produce new technologies. It’s a major win for American workers, small businesses, and the economy they make strong.”
“Currently, far too many of our Wisconsin small businesses are not aware of how to access the Research and Development tax credits that would help them expand and create more jobs. By increasing education and information about the Research and Development tax credit to Wisconsin small businesses, we can help level the playing field for our small businesses,” said Congressman Kind. “Wisconsin small businesses are the economic drivers in our local communities, and we need to work together to pursue commonsense policies, like the Support Small Business R&D Act, which help our businesses grow and create jobs.”
“Congress passed important legislation in 2015 that gave startups and small business access to the R&D tax credit, “said Stephen S. Tang, Ph.D, MBA, President and CEO, University City Science Center. “Raising awareness in the startup community is the next step, and the Support Small Business R&D Act accomplishes that. Senators Coons and Robert’s legislation will help ensure that startups are informed about the important changes and benefits of the R&D credit by encouraging the SBA and IRS to better educate companies, in partnership with business incubators like the Science Center. The economy of the Delaware Valley stands to benefit from the Support Small Business R&D Act.”
“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 business starts are the driver of the U.S. economy. Recent research found that not only are new businesses the primary source of net new jobs, but also factor significantly into increased productivity, wage growth and ultimately advances in standard of living,” 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 Senate 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. Senator 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.