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Washington High Technology Incentives Expiration

Currently, two of Washington's tax incentives for businesses performing research and development activities are set to expire on January 1, 2015. Businesses wishing to take advantage of these incentives need to be aware of the following guidelines.
 

High Technology B&O Credit for Qualified R&D Expenditures

 

This B&O credit is based on qualified R&D expenses incurred by a business during the calendar year. It is claimed on the periodic Combined Excise Tax Returns with a year-end reconciliation to match the credit claimed to the actual amount allowed in the calendar year. It is non-refundable and cannot be carried over to future years.

  

Expenses must be incurred in 2014 and the related credit must be claimed on 2014 returns. However based on recent Department of Revenue guidance, this credit may be taken on 2014 returns filed in 2015. For example it may be taken:

 

  • For monthly filers, on the December 2014 return, due January 25th
  • For quarterly filers, on the Fourth Quarter return, due January 31st

  • For annual filers on the 2014 return, due January 31st

 

R&D expenditures incurred on January 1, 2015 or later are not eligible for a credit.

 

High Technology Sales and Use Tax Deferral

  

This program provides a sales/use tax deferral on construction or expansion costs for qualified R&D or pilot scale manufacturing facilities in Washington. An application must be filed and approved in advance of permitting or before taking possession of machinery and equipment. If all program requirements are met the deferred sales/use tax will be fully waived over 8 years.

 

Businesses who wish to take advantage of this deferral should apply to the Department of Revenue by November 1, 2014. As the Department of Revenue has 60 days to approve or deny applications, this will ensure a decision is received by year-end. After a deferral certificate is approved, actual construction can occur in 2015.

 

Companies with current deferral certificates are not affected by the expiration and may continue to use them for qualified expenditures.

 

Additional information on these incentives and requirements can be found on the Department of Revenue's website.

 

If you have any questions, please contact Chris Laine, Principal and Director of State and Local Tax at Berntson Porter, at 425.289.7609 or claine@bpcpa.com.

 
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