New procedures for Alabama incentives and R&D Feb 1 deadline

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January 2020

Overview

The Alabama Department of Revenue announced a change in procedures in claiming certain economic incentives on income tax returns.

Beginning January 21, 2020, prior to claiming benefits on income tax returns. taxpayers must be registered to use My Alabama Taxes (MAT) and submit an online form that provides required information regarding certain economic incentives. Starting January 21, 2020, the Department will not process certain economic incentives claimed on returns if taxpayers do not submit online forms through the MAT.

In addition, on June 6, 2019, Governor Kay Ivey signed the Alabama Innovation Act, which established the Alabama Research and Development Enhancement Fund (ARDEF) program. The purpose of the program is to encourage new and continuing efforts to conduct research and development activities within the state for the purpose of increasing employment opportunities and products and services available to the citizens of Alabama.

To receive available benefits from the ARDEF Program, a taxpayer must incur future eligible qualified research expenses (QRE) in Alabama and submit an application to the Alabama Department of Economic and Community Affairs (ADECA) by February 1, 2020.

The takeaway

The economic incentive programs listed above are some of the most common and popular credits in Alabama. Taxpayers claiming these credits should submit compliance documentation well in advance of the Alabama return filing date for 2019 and later year tax returns. 

Alabama has enacted a needed research credit, but only for contract and consortium research expenses. Taxpayers that anticipate future eligible Alabama QREs should submit applications to the ADECA by February 1, 2020.

Contact us

Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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