Disabled access credit.

• Author: Laffie, Leslie S.
• Position: From the IRS

According to Chief Counsel Advice (CCA) 200411042, software expenses to improve access to a business website are ineligible for the Sec. 44(a) disabled access credit, because they do not meet a physical presence requirement. Further, annual software subscription costs are not eligible.

Law: Sec. 44(a) allows an "eligible small business" to claim a disabled access credit of 50% of the "eligible access expenditures" for the tax war that exceed $250 but not $10,250; thus, the maximum credit for any year is $5,000 (50% ($10,250-$250)). For this purpose, an eligible small business is any person (1) with gross receipts for the preceding tax year that did not exceed $1 million or (2) that did not have more than 30 full time employees during the preceding tax year.

Eligible access expenditures are amounts paid or incurred by a small business to comply with the applicable Americans with Disabilities Act of 1990 (ADA) requirements; see Sec. 44(c)(1). Under Sec. 44(c)(2), some of these expenditures include amounts to provide:

* Effective methods (e.g., qualified interpreters) of making aurally delivered materials available to hearing impaired individuals; and

* Effective methods (e.g., taped texts) of making visually delivered materials available to individuals with visual impairments.

Facts: In the CCA, developers created software that allows certain disabled individuals (e.g., hearing and speech impaired or visually impaired) to improve communication with a business. Several businesses that bought the software conducted business only via the Web. The developers claimed that using their software program made each business's website more accessible to disabled individuals and that the businesses would qualify for the disabled access credit. Some businesses paid the developers annual subscription costs...