A bill has been introduced in the California Legislature aimed at helping small businesses use research and development tax credits they are earning, but having trouble using.
The proposed law, AB437, would allow small businesses with $5 million or less in gross receipts to cash out a portion of the tax credits they have earned and use them to reinvest in further research and development.
The bill would let businesses cash out 10 percent of all tax credits received in 2014 and 2015 and 15 percent in 2016 and beyond.
According to the Franchise Tax Board, businesses with $1 million to $10 million in gross receipts earned $100 million in tax credits, but only $13 million of those credits were used. Many businesses weren’t able to use the credits due to a lack of tax liability.
“Small businesses are so important to California’s economy that we need to be creative in helping these job-creators start and succeed,” said Assembly Speaker Toni Atkins, D-San Diego, in a release about the initiative. “Creating a grant program as part of the California Research Tax Credit helps small businesses by allowing them to cash out some of the research and development tax credits they receive and reinvest those resources, boosting their business and moving the state forward.”
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