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The Omnibus Budget Reconciliation Act of 1990 (OBRA 190) contains
a tax incentive to encourage small businesses to comply with the Americans with
Disabilities Act.
DAC is available to an "eligible small business" and is equal to
50 percent of the "eligible access expenditures" which do exceed $250, but do
not exceed $10,250, for a maximum credit of $5,000 a year. It is included as
part of the General Business Credit and is subject to the rules of current law
which limit the amount of General Business Credit that can be used for any
taxable year.
DAC can be carried forward up to 15 years and back for three
years, but not back to a taxable year prior to the date of enactment.
An "eligible small business" is "any person" whose gross receipts
did not exceed $1,000,000 for the preceding taxable year, or who employed not
more than 30 full-time employees during the preceding year. A full-time
employee is defined as one who is employed at least 30 hours per week for 20 or
more calendar weeks in the taxable year.
In general, all members of a controlled group of corporations will
be treated as one person for purposes of credit eligibility, and the dollar
limitation among the members of any group will be apportioned by
regulation.
In the case of a partnership, the expenditure limitation
requirements will apply to the partnership and to each partner. Similar rules
will apply to S corporations and their shareholders.
"Eligible access expenditures" are defined as "amounts paid or
incurred by an eligible small business for the purpose of enabling small
businesses to comply with applicable requirements" of the ADA. Included are
expenditures for:
- removing architectural, communication, physical, or
transportation barriers which prevent a business from being accessible to, or
usable by, individuals with disabilities;
- providing qualified interpreters or other effective methods of
making aurally delivered materials available to individuals with hearing
disabilities;
- providing qualified readers, taped texts, and other effective
methods of making visually delivered materials available to individuals with
visual disabilities;
- acquiring or modifying equipment or devices for individuals
with disabilities;
- providing other similar services, modifications, materials or
equipment.
All expenditures must be "reasonable" and must meet the standards
promulgated by the Internal Revenue Service with the concurrence of the
Architectural and Transportation Barriers Compliance Board. Expenses incurred
for new constructions are not eligible.
An eligible small business under Section 44 may deduct the
difference between the disabled access credit claimed and the disabled access
expenditures incurred, up to $15,000, under Section 190, provided such
expenditures are eligible for the Section 190 deduction.
The Disabled Access Credit is found in Section 11611 of OBRA '90,
which establishes Section 44 of the Internal Revenue Code of 1986.
THE ARCHITECTURAL AND TRANSPORTATION BARRIER REMOVAL DEDUCTION
(SECTION 190 INTERNAL REVENUE CODE)
In 1986, Congress amended Section 190 of the Tax Reform Act to
extend permanently the annual $35,000 tax deduction for the removal of
architectural and transportation barriers. P.L. 101,508, the Omnibus Budget
Reconciliation Act of 1990, amended Section 190 and reduced the deduction from
$35,000 to $15,000, effective for tax years after 1990.
Under Section 190, businesses may choose to deduct up to $15,000
for making a facility or public transportation vehicle, owned, or leased for
use in the business, more accessible to and usable by individuals with
disabilities. A facility is all or any part of a building, structure,
equipment, road, walk, parking lot, or similar property. A public
transportation vehicle is a vehicle, such as a bus or railroad car, that
provides transportation service to the public, or to customers.
The deduction may not be used for expenses incurred for new
construction, or for a complete renovation of a facility or public
transportation vehicle, or for the normal replacement of depreciable
property.
In the case of a partnership, the $15,000 limit applies to the
partnership and to each partner.
Amounts in excess of the $15,000 maximum annual deduction can be
added to the basis of the property subject to depreciation.
In order for expenses to be deductible, accessibility standards
established under the Section 190 Regulations must be met. For additional
information on the Disabled Access Credit or Section 190, contact a local
Internal Revenue Service office or:
Office of Chief Counsel
Internal Revenue Service
1111
Constitution Avenue, NW
Washington, DC 20224
202-622-3110
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