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ADA Compliance Tax Credit: Here’s What Small Businesses Should Know

Maybe you're here because you're worried about an ADA compliance lawsuit or want the SEO perks of updating and optimizing a site for ADA compliance. Or perhaps, you want your website to be accessible to everyone. Likely while researching what it takes to update your site and get it accessible to all, you may have noticed a price tag that you didn't anticipate. But, know that there is a tax credit that can help.

Whether you are a small business developing your website or you’re choosing to outsource a website developer, there is now a financial incentive to make your website ADA-compliant (compliant with the Americans with Disabilities Act). In addition to avoiding any foreseeable legal trouble, you can receive an IRS tax credit that comes with a $5,000 tax incentive.

In this blog post, Werkbot, a leader in ADA compliance website design, takes you through the current ADA landscape, provides information about the tax credit, and explains how it can benefit your business.

ADA Compliance Tax Credit

Two women working on a computer together.

The ADA Compliance Tax Credit has existed for some time, only now including an incentive to boost accessibility for all and assist struggling businesses. Specifically, Congress established the tax credit under Section 44 of the Internal Revenue Code in 1990. The tax credit intends to “help small businesses cover ADA-related eligible access expenditures.”

Tax credits are dollar-for-dollar reductions of your owed income tax. To put this in perspective, let’s say you own $15,000 in federal taxes. If you have a $5,000 tax credit, your net liability reduces to $10,000. There are, however, several requirements to obtain the tax credit. To file for the ADA Compliance Tax Credit, businesses must:

Have total revenues of $1,000,000 or less in the previous tax year; or,
Have 30 or fewer full-time employees

*Note: The tax credit may only cover half of the company’s purchases in a single year, up to $10,250 for a maximum credit of $5,000.”

If you are unsure if you qualify, contact an accountant or tax specialist for more information. To claim the tax credit, fill out Form 8826, Disabled Access Credit.

Benefits

According to the ADA Title III Compliance Materials fact sheet No. 4, your business may use the tax credit and deduction annually. However, you may not:

Carryover expenses from one year to the next and claim a credit; or,
Deduct for the portion that exceeded the expenditure limit the previous year

You may use the tax credit for a number of expenses, such as:

  • Provision of readers for customers or employees with visual disabilities
  • Provision of sign language interpreters
  • Purchase of adaptive equipment
  • Production of accessible formats of printed materials (i.e., braille, large print, audiotape, computer diskette)
  • Removal of architectural barriers in facilities or vehicles
  • Fees for consulting services
  • Adaptations to existing facilities that are required to comply with the ADA

By ensuring that your website is ADA compliant, not only will you and your business qualify for this tax credit, but you may also avoid a potential lawsuit. Know, too, these changes will have a more significant customer base and increase your reputation, given that more people will have access to your website.

Overview of the ADA Landscape

Man creating website coding.

While ADA compliance-related lawsuits fell from 11,053 to 10,982 from 2019 to 2020, respectively, numbers are expected to rise for the 2021 year. In January 2021 alone, Seyfarth’s ADA Title III team notes that there were 1,108 cases filed—the most ever recorded in a single month.

Seyfarth attributes these numbers to the digital landscape created by the pandemic, which has caused e-commerce to increase. April and May of 2019 experienced the lowest number of lawsuits; numbers are picking back up now that business operations are resuming.

While many establishments are back up and running, their corresponding websites are not always up to par with their physical operations.

The Wall Street Journal reported that “companies with revenue below $50 million were the targets of two-thirds of lawsuits between Jan. 1 and June 21” this year; this is mainly because the pandemic has increased awareness surrounding ADA compliance.

Part of the problem is that companies and their stakeholders are often uncertain about what makes a website ADA compliant. What’s more, many don’t know that ADA compliance is even an issue at all. So, although many companies have good intentions, their efforts may fall short without the proper guidance.

For many smaller businesses looking to update a website to be ADA compliant is simply a money problem. But we have good news: the ADA Compliance Tax Credit.

All in a Day's Werk

Ensuring your website is ADA compliant isn’t just about avoiding lawsuits. It’s about making your digital storefront open to everyone.

But the task of ensuring ADA compliance doesn’t come without its challenges. First, it takes web development savvy—and not everyone has that on their team. And two, the price tag of making the necessary changes can seem expensive. But it’s important to keep in mind how these changes will ultimately save you money by avoiding lawsuits and increase your revenue by accommodating a bigger customer base.

To help make your ADA compliance initiatives more affordable, use the ADA compliance tax credit. For more information on how we can help you develop a website fit for all to use, fill out our contact form or give us a call at (814) 461-1322.

 

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