Introducing the Disabled Access Credit
TLDR: Ask your accountant about the Disabled Access Credit. You can claim 50% of what you spend on web accessibility each year up to $5,000 as a nonrefundable tax credit.
It’s a reality of our line of work that the costs of web accessibility fall disproportionately on the small businesses that have the least in-house expertise or funds to make accessibility a priority. Not only must they devote a significant portion of their overall digital budget to accessibility, but they also suffer the most risk when they fall short. They don’t have in-house counsel on call to respond to demand letters and they make easy targets for surf-by lawsuits. We believe that the typical business-as-usual approach of audits and remediation is too expensive for most businesses ineffective at moving the needle towards a more accessible web.
That said, if you feel that undergoing a full audit and remediation is the right move for your business, the government is willing to help in at least one very significant way. (Read here for our take on when automated accessibility may not be right for you.) You can essentially get up to 50% of your spending on web accessibility refunded by the government.
This particular tax credit is probably less useful for our core Fully Automatic service. The credit does not kick in until you spend $250 at minimum (and even then, it will only cover 50% of every dollar you spend). In other words, if you spend $420 a year, you’ll get a tax credit of $85. There’s no reason not to claim it, but it probably isn’t a major factor in your digital planning.
Why then are we telling you about this?
We think that anything that brings about more accessibility is on margin a good thing and even if you choose not to use our services, you are probably in the market for accessibility services if you are reading this post. If you are going to spend $10,000 or more on audits and remediation, you can slash that amount nearly in half. If you are spending $20K or more, you can potentially structure your payments over two calendar years and knock off up to $10,000.
But if you are considering some of our other services like Accessiblu+ Hybrid or Fully Manual, this credit can make a serious dent in the cost.
For example, if you are using Accessiblu+ Hybrid to add manual remediation along with automated accessibility, you can eliminate your risk through a $1 million warranty. Normally, that would cost a hair over $4,000 your first year including initial setup costs. After taking the Disabled Access Credit, your first year costs would be only $2409. And for subsequent years, your net cost (after tax credit would be only $659). That’s a pretty great tax incentive to make your site fully accessible and make sure you won’t incur any legal costs.
Are you eligible?
Very Important Disclaimer: We are neither lawyers nor accountants and are not giving legal or tax filing advice. Please consult with qualified professionals to verify your eligibility.
The IRS offers this tax credit to small businesses. Their test to determine if you qualify is very simple. If either of the following conditions applies to you, then you may claim this credit:
- Your business has annual revenues of less than $1 million
- OR you employer fewer than 30 full-time employees (i.e. works at least 30 hours per week for at least 20 weeks)
This is a fairly broad definition of small business, which would cover most organizations that we speak with.
What expenses qualify for the Disabled Access Credit?
The IRS allows you to claim this credit for any expenditures that are paid or incurred in order to comply with Americans with Disabilities Act (ADA). Our focus here is web and mobile app accessibility, but this credit can also be claimed for physical improvements to your business and other accessibility improvements. The IRS rules specify some of the following examples but this list is not exhaustive:
- Removal of barriers that prevent a business from being accessible
- Providing sign-language interpreters interpreters or other methods of making audio materials available to hearing-impaired individuals. This would also include captioning videos.
- Production of print (or digital text) materials in accessible formats
- Consulting fees
However, double dipping is not allowed. That means that if you previously claimed a deduction or other credit for any of these expenses, you cannot also take advantage of the Disabled Access Credit.
The relevant IRS Form 8826 which includes a worksheet and detailed rules can be found here. As always, we recommend that you consult with your accountant or tax advisor to determine your eligibility for this credit.
Accessiblu is available to discuss whether any of our credit eligible automated accessibility and consulting services are right for your business. Get in touch today for a free consultation and find out how we can help.