The Tax Cuts and Jobs Act of 2017 included major changes to Section 174 of the Internal Revenue Service (IRS) Code to take effect in 2022. These changes require businesses to amortize research and development (R&D) expenses over a five-year period instead of deducting them in the year they were incurred.
The U.S. National Science Foundation (NSF) recognizes this change may impact some small businesses. Small businesses that receive Small Business Innovation Research or Small Business Technology Transfer (SBIR/STTR) funding should seek guidance from the Internal Revenue Service (IRS) or a tax professional on how this change may affect them.
Please note: Federal income and excess profits taxes are strictly not allowable charges to NSF awards, either as direct or indirect costs (see FAR 48 CFR 31.205-41). NSF SBIR and STTR application budgets may include a “fee” that may be used by the small business for any purpose, including payment of a tax liability.
The U.S. National Science Foundation and its contractors do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction or when determining tax and reporting obligations.