1. United States
2. Colo.
3. Letter

American ingenuity has long powered breakthroughs that keep the United States at the forefront of global innovation. In recognition of how vital research and development is to that leadership, Congress has historically offered tax incentives that help maintain America’s competitive edge. Yet the 2022 rollout of Section 174’s amortization requirement, introduced by the Tax Cuts and Jobs Act, locked up critical capital and sharply limited the resources young, domestic companies need to keep innovating. Innovation is the engine of the U S economy, yet the cash it requires is increasingly scarce for young firms. We therefore urge Congress to include a retroactive carve-out from Section 174’s amortization requirements for R&D expenses for domestic companies in the upcoming reconciliation bill. The implementation of the amortization requirement in 2022 had a profound impact on growing domestic companies. Startups that were just breaking even – or even losing money - were suddenly treated as profitable for tax purposes, inflating their payable amounts precisely when every dollar of operating capital mattered. While large, cash-rich multinationals could absorb this hit, early-stage companies had to divert funds from hiring, product development, and growth - handing overseas competitors an advantage at the very moment American ideas should be scaling. Providing retroactive relief to domestic companies will free up the working capital founders could not deploy once amortization took effect. Directing that money back into U.S.-based high-growth ventures will translate into cutting-edge innovation, skilled American jobs, and critical technological advances performed onshore. Correcting Section 174 in reconciliation will lift an unintended tax burden from thousands of domestic startups, keep them in the global race, and demonstrate that Congress rewards companies willing to innovate at home rather than abroad. We respectfully ask you to make this domestic carve-out - and ultimately a full repeal of R&D amortization for U.S. companies - a priority as you finalize the bill. Doing so will unlock the full potential of American entrepreneurs, accelerate economic growth, and secure a brighter future for all.