New Understanding of Tax Credits Make It Easier for Businesses to Conform to the Americans with Disability Act Standards

June 18, 2009; 04:12 AM

Charleston, SC (Sbinformer) – June 2009 - The Americans with Disabilities Act (ADA) has created quite a stir among small business owners. In order to comply with the ADA, they must purchase expensive equipment or make costly changes to their business locations, requiring money that many do not have due to the current economic state. A tax credit for these purchases is available, but lack of understanding has caused many business owners to resist claiming it.

Confusion surrounding this credit is the IRS has not yet issued rules or regulations. The credit is available, but many business owners are unsure if their purchases qualify.

The Internal Revenue Service, in an attempt to clear up confusion about which products and purchases qualify for tax credit, recently issued a Technical Advice Memorandum. In this document, the IRS states that any purchases qualifying for a tax credit, known as the Disabled Access Credit, must have been made for the primary goal of assisting handicapped individuals.

Specifically, Code Section 44 of the ADA allows certain small businesses to take an income tax credit for expenses they incurred in order to comply with the act. Businesses can claim 50 percent of all "eligible access expenditures" that are more than $250 but less than $10,250.

In order for a purchase to qualify as an eligible access expenditure, it must first be made in order to comply with ADA requirements. Second, it must be reasonably necessary to fulfill this need. This two-part test is the only way to determine whether or not a purchase qualifies, and no company or government agency is allowed to certify or guarantee that a particular product meets the provisions of the tax credit.

Small medical practices bear the brunt of the financial strain created by the ADA. Medical equipment designed for individuals with handicaps is incredibly expensive. This potential tax credit promises to make it much easier for doctors, dentists and other medical and health professionals to make their care more accessible for handicapped patients.

Haag Streit is a company that provides medical practice equipment and ophthalmic instruments. Many of their products have been modified help handicapped patients, specifically those bound to wheelchairs, gain access to the care they need. For instance, they offer a Chair Glide, a device that modifies an existing medical or dental chair so that it can slide back in order to accommodate those in wheelchairs. Small medical practices can purchase these products to comply with the requirements of the ADA. Under current understanding of he tax credit, the entire cost for these types of products can be applied to the Disabled Access Credit.

Dennis Berman, OPT, commented, "I'm excited. This new memo and possible tax break could be minor 'bailout package' for many small practitioners who want to make every effort to help patients with physical challenges, but have been limited by recent financial stresses."

Only a qualified tax professional can fully determine whether or not a purchase qualifies for the Disabled Access Credit, so business owners who want to take advantage of this legislation need to contact their tax professional before making any purchases.