Financial Accessibility Savvy
Does your business get its share of $200 billion dollars in discretionary spending?
It does if your business is ADA compliant.
The approximately 54.7 million disabled Americans are a significant portion of the consumer market. Many business people understand the benefits of a fully accessible business. An accessible business - encompassing the physical structure, programs, facility and staff training, and web presence – benefits from the patronage of all potential customers. Unfortunately, business owners often place accessibility so far down on the budget priority list that compliance necessary and/or revenue generating changes do not get implemented.
The Department of Justice (DOJ) recognizes that the process of what changes are readily achievable is not a one-time effort, but rather a determination that should be made annually. A savvy business owner recognizes the physical barriers that need to be removed, program changes to be made, training to be completed, and web site access that must be provided; this information is then compiled into an implementation plan that uses tax incentives to help defray cost.
Information Provided Here: The information that follows is in this order.
- Tax Credit - The Fast Facts
- Tax Deduction - The Fast Facts
- Combined Incentive - Sample Scenario
There are two tax incentives available to businesses to help cover the cost of making accessibility improvement. One is a tax credit and the other is a tax deduction. A tax credit, subtracted from your tax liability after you calculate your taxes, can be used for architectural adaptations, purchasing equipment, and offering services such as sign language interpreters. However, a tax deduction, subtracted from your total income before taxes, can be used for architectural or transportation adaptations.
Tax Credit – The Fast Facts:
Business total revenue 1 million or less in previous tax year
30 or less full-time employees
Cannot be used for the costs of new construction – only adaptations to existing covered facilities
Maximum tax credit is $5,000 (minus the first $250 expenditure) as it is 50% of the eligible $10,250 in a year
Covered items can include:
Purchases of certain adaptive equipment
Providing accessible formats – braille, large print, audio tape
Provide availability of sign language interpreter ora reader
Remove architectural barriers in facilities and/or vehicles
Section 44 of the IRS Code (Form 8826)
Tax Deduction – The Fast Facts:
Available to all business (no revenue or employee caps)
Maximum tax deduction limited to $15,000 per year
Covered items can include: Barrier removal and Alterations
Section 190 of the IRS Code
Combined Incentive – Sample Scenario
Scenario: Wheels Neighborhood Bike Shop has removed physical barriers from the shop. This is done as part of a phased implementation plan the owner worked on with an ADA Consultant. The total cost for the current year amounted to $20,000. The savvy bike shop owner is looking to defray this cost and will use both tax incentives.
$20,000 cost of physical barrier removal (rest room, ramp, 3 doors widened)
-$ 5,000 maximum tax credit (the %50 eligible)*
-$15,000 maximum remaining tax deduction
$ 0 remaining balance
Please note * the tax credit is 50% of the $10,250 eligibility.
Wheels Neighborhood Bike Shop can use this combination annually as the owner works through the implementation plan. The owner cannot carry over expenses from one year to the next. However, if the amount of credit the owner is entitled to exceeds the amount of taxes owed, the owner may carry forward the unused portion of the credit to the following year.
The information presented here is solely intended as informal guidance, and is not a determination of your legal rights or responsibilities under the ADA. Please review the details and information with an accountant or contact your local IRS office.