How Do I ... Comply With Disability Law (Part II)
There are two tax incentives to help businesses comply with the Americans with Disabilities Act -- a credit and a deduction.
The tax credit can only be used by small businesses, which the Internal Revenue Service says is one that has fewer than 30 employees or has grossed less than $1 million over the past year. Even if a business grows to $3 million but has only 20 employees, it will still qualify, according to attorney Elizabeth Gaudio who specializes in disability issues. If a firm grossed less than $1 million but has 40 employees, it also would meet the standards.
The IRS allows a small firm to get a credit for 50 percent of its costs related to ADA compliance for any total over $250. For every $1 over $250 a small firm spends on disability compliance, it gets a return of 50 cents. For example, if a clothing store had a wheelchair-accessible ramp installed for $2,000, it would get a credit of $1,000 from the IRS. If a restaurant spends $6,000 on Braille menus, it would get a credit of $3,000. The maximum amount a business can get back for tax year 2007 is $5,000.
The deduction can be used by a business of any size, said Gaudio, who serves as senior executive counsel to the National Federation of Independent Business Legal Foundation.
Any firm can take a deduction of up to $15,000 on all costs related to removing physical obstacles to the disabled. For example, widening doors, installing handrails or putting wheelchair lifts on delivery vans are all improvements that would be considered deductible under this provision.
A company can expense up to $15,000 related to ADA compliance in lieu of putting these costs in the depreciated or capitalized tax filing column, she said.
The U.S. Justice Department offers a tax packet outlining incentives designed to help small businesses comply with the ADA. Many states also offer additional incentives like tax deductions for helping disabled individuals. Check with an accountant for more specifics on exactly which renovations fall under the IRS deduction or for details on state incentives.
Gaudio said that there's no guarantee that any renovations or modifications to a business will guard it against an "unscrupulous plaintiff." However, concerted efforts to be ADA compliant will only aid a small business in its defense and in its reception by the community, she said. Unfortunately, the law does not require that somebody provide notice to the firm before filing a lawsuit.
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