ADA Barrier Removal Tax Credit

The Federal Government has changed the tax code to help businesses improve accessibility. Congress legislated the annual tax credit of $5,000:

For the purpose of enabling...eligible small businesses to comply with applicable requirements under the Americans with Disabilities Act (ADA) of 1990 (Section 44 of Internal Revenue Code).

Any qualified expenditures made after November 5, 1990, the date of enactment, are eligible for the Section 44 credit. Additionally, Section 190 of the Internal Revenue Code allows $15,000 to be deducted annually for qualified architectural and transportation barrier removal expense. This provision became effective with tax year 1991.

Provisions of Section 44

A small business may elect to take a general business credit of up to $5,000 annually for eligible access expenditures to comply with the requirements of ADA. Small business is defined as a business with gross receipts of $1 million or 30 or fewer full-time employees. Expenditures must be geared toward ADA compliance and must be reasonable and necessary expenses. Included are amounts related to removing barriers, providing interpreters, readers or similar services and modifying or acquiring equipment and materials. The amount that may be taken as a credit is 50% of the amount exceeding $250, but less than $10,250 per tax year. For instance, if $7,500 is spent to provide an interpreter, the credit would be $3,625 ($7,500 minus $250 divided by 2.)

A business may take this credit each year it makes an accessibility improvement, be it purchases of equipment, provision of communication assistance or removal of an architectural barrier.

This tax credit, called the Disabled Access Tax Credit, should be claimed on IRS Form 8826.

Section 190

Section 190 applies to all businesses and has a narrower base for deductions. Qualified expenditures for the removal of architectural and transportation barriers include expenses specifically attributable to the removal of existing barriers (such as steps or narrow doors) or inaccessible parking spaces, bathrooms and vehicles. They may be fully deducted, up to a maximum of $15,000 for each taxable year. Expenses from the construction or comprehensive renovation of a facility or vehicle or the normal replacement of depreciable property are not included.

For further information contact your local IRS Office or www.irs.gov

The IRS Home Page also has information on these deductions, including library of forms and publications that you can download.

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