Haag Streit Products Qualify for Eligible Access Expenditures

The Americans With Disabilities Act (ADA) has generated much discussion regarding its application to the purchasing of equipment and subsequent credits, particularly the disabled access credit. Please be advised that the Internal Revenue Service has not yet issued any rules or regulations regarding the disabled access credit. They have recently, however, issued a Technical Advice Memorandum, that states that the primary purpose of the purchase must be to aid handicapped patients in order to qualify for the credit. Due to the confusion and various claims regarding this matter, practitioners are looking for clarification and direction.

Code Section 44 permits eligible small businesses to take an income tax credit, termed the Disabled Access Credit, for expenditures incurred to comply with the ADA. The eligible small business may utilize the Credit for 50% of “eligible access expenditures” in a tax year that exceed $250 but do not exceed $10,250.Thus, in order to take the credit, the business expenditure must be qualified as an “eligible access expenditure”.

Most importantly for the purpose of the practitioner, Code Section 44 ©(3) requires that eligible access expenditures must be reasonable and necessary to comply with the ADA requirements. Therefore, assuming the purpose of a purchase is to acquire or modify equipment or devices for disabled individuals, the purchase must be reasonably necessary to accomplish that goal. A two-part test can be deduced to determine whether an expense is an eligible access expenditure, and thus subject to the credit. First, the expenditure must be for the primary purpose of complying with the ADA requirements; and second, the expenditure must be reasonably necessary to accomplish that purpose.

Reliance believes that the purchase of a Low model examination or procedure chair, the chair mover, and/or the purchase of the model 7720 or 7800 instrument stands that have been modified for accommodation for the handicapped, may qualify for the disabled access credit. Reliance has modified these products specifically for the wheelchair access for disabled persons. All correspondence will emphasis this fact and, therefore, will assist the practitioner and his or her advisor in acquiring the appropriate documentation to support their position.

One bit of caution is warranted. There is no group or agency, government or otherwise, that issues valid and binding certification that any equipment is approved for or will satisfy the requirements for the disability tax credit. There is no group or agency that has been authorized to give such certification. Please be advised that there is not anyone who can say with certainty that a particular piece, type, or model of equipment does or does not qualify for the disability tax credit. No one can say that his or her equipment qualifies for the tax credit, or that anyone else’s equipment does not qualify. Because the availability of the credit depends upon the two-part test stated above, the practitioner should consult his or her tax attorney or tax advisor to determine the availability of the credit rather than rely on any statement that a particular piece of equipment is ADA approved or qualifies.