PA Issues R&D Tax Credit Award Notifications with a New Requirement

PA Issues R&D Tax Credit Award Notifications and Adds Requirement to File a Tax Credit and Tax Benefit Accountability Report

On or about May 31, 2022, the Pennsylvania Department of Revenue issued notification letters to businesses applicable to the state’s Research and Development (R&D) tax credits for the 2021 tax year. The awarded credits were based on R&D credit applications filed on or before December 1, 2021. In prior years, the award letters were issued on or about December 15 of the same year as the application. However, for 2021, and possibly future years, the credit award letters were not issued until May 31 of the following year.

If you received a PA R&D tax credit award letter on or about May 31, you may have noticed that now, there is an additional requirement to file a Tax Credit and Tax Benefit Accountability Report to claim the PA R&D tax credit, as well as other PA tax credits. This new report must be filed online and within 45 days of filing an annual tax return. The requirement begins the first year the tax credit or tax benefit is awarded, and ends after the credit or benefit has been fully utilized.

We invite you to review the following additional information regarding the process to complete the Tax Credit and Tax Benefit Accountability Report.

Basic Instructions for Completing the Tax Credit and Tax Benefit Accountability Report

Section I:
Enter general business information

Section II:
If “tax credit” was selected from Section I, the Tax Credit Information and Reporting Questionnaire will be populated within the fields on the page. There are 5 components to this questionnaire:

1. Program Identification – select the program for the tax credit that was awarded from a list provided
2. Award Identification – enter award ID, amount awarded, and date of award as listed on your notification letter
3. Credit Utilization – enter how the credit was utilized in the aggregate under the award ID, which may include several years if the credit was carried forward and used annually over a period since the initial award date
4. Impact Reporting – if applicable, provide the total of expenses and jobs generated as a result of the receipt of the tax credit
5. Sale and Assignment Identification – report if the credit was sold or assigned. If no, then you will be redirected to the Acknowledgement page. If yes, then you will be redirected to the Tax Credit Sale/Assignment page, and then you will record each transaction that was conducted with a Buyer or Assignee.

Section III:
If “tax benefit” was selected from Section I, the Tax Benefit Information and Reporting Questionnaire will be populated within the fields on the page. There are 2 components to this questionnaire:

1. Program Identification – select the program for the tax benefit that was awarded from the list provided
2. Impact Reporting – if applicable, provide answers to the questions as a result of participation in the tax benefit program

Section IV:
Check the acknowledgement box to submit the report. By checking the box, you are signing the form electronically and providing consent that you understand and agree that the “I Accept” check box constitutes a legal equivalent of a handwritten signature. Once the box is checked, click on the Submit Button and then a confirmation email will be immediately sent regarding the submission of the report.

For any additional information or questions regarding this article, please contact your Herbein tax consultant at the form below

Article contributed by Jodi L. Lovell, EA, ATA.