Retraining Tax Credit Comes Under Closer Scrutiny

Jim Tinsley . 02.05.20

Applications for the Retraining Tax Credit (RTC) are being challenged and declined statewide, though no changes have been made to the RTC guidelines and the same training programs have been readily approved in prior years. Our network of tax credit experts and providers who service SMBs and large corporations confirmed that this is uniformly true regardless of business size.

This developing situation may have an immediate impact on your clients’ current income tax burden. This is what we understand so far:

  • Training for software upgrades is under closer scrutiny, with more programs being disqualified as applying to “routine or minor upgrades” or “business as usual.” The training program must relate to “newly implemented technology” and must represent “significant” new capabilities / functionality / processes.
  • Training on upgrades to quality programs and LEAN initiatives no longer count.

Example: Training on ISO-9001:2015 as an upgrade from ISO-9001:2008 does not qualify, whereas training on ISO-9001:2015 where no previous ISO training does qualify.

  • Training on subjects required under commercial license agreements may now be considered “mandated training” and, therefore, not eligible.

Example: Training automotive technicians on new model year may no longer qualify.

  • Training on mobile tablets (e.g., iPads) now considered routine and, therefore, not “significant,” and no longer qualifies.

We strongly encourage you to contact your clients with this important update, especially those who have used the RTC in the past and who may be budgeting for a credit to offset their 2019  income tax liability.

Please contact your Account Manager if you have any questions.