Existing tax laws currently address AT, AMT and UD. Notably there are tax benefits to encourage hiring of disabled workers and tax code provisions to defray costs of AT purchases. Employers who seek to accommodate workers with disabilities through the use of UD or AT qualify for several potential tax benefits.

Employers

Employers purchase AT devices and services as “reasonable accommodations” for workers with disabilities. The tax code in Section 190 permits large businesses to deduct some of these costs as necessary business expenses. Under Section 44, small companies are allowed to take tax credits for such costs, which reduce the cost for these employers.

Individuals

Individuals purchase AT devices and services on their own. In fact, individuals with disabilities themselves and without third-party support assume a sizable share of AT purchases and upkeep costs. The current tax code permits individuals who secure these products and services to claim a tax deduction against earnings, to the extent that the AT makes employment possible and to the extent that an employer does not reimburse the costs. No similar tax advantages accrue to persons who get such services or products, but do not work. Individuals who receive Supplemental Security Income (SSI) benefits and secure Social Security Administration approval for a Plan for Achieving Self Support (PASS) may deduct approved AT expenses against income in excess of the SSI limits.

Barrier Removal Deduction

All businesses, regardless of size, are permitted to claim a deduction of up to $15,000 per year for the removal of architectural and transportation barriers to the elderly and disabled.³⁴

Disabled Access Credit

Small businesses (defined as those with 30 or fewer full-time employees or those with preceding year gross receipts under $1 million) can claim a tax credit for 50 percent of up to $10,000 per year (over a $250 cost threshold) in costs incurred to comply with the ADA.³⁵

Work Opportunity Tax Credit

This credit amounts to a maximum of $1,500 against the first year wages of qualifying employees. A number of groups qualify, ranging from ex-felons to summer youth and welfare recipients. Two narrowly defined groups of persons with disabilities are included among the covered classes:³⁶

• Persons who received Supplemental Security Income SSI) payments within 60 days prior to being hired; and,
   
• Persons referred by state vocational rehabilitation agencies after completion of a VR program.

To the extent that a sizable share of AT purchases and upkeep costs are assumed by individuals with disabilities themselves without third-party support, the tax code provisions serving to defray these expenses are also vitally important. Two major provisions are at issue here:

1. The Impairment-Related Work Expenses Deduction

   This deduction allows an individual to claim an itemized deduction for “attendant care services” or “other” expenses incurred “at” or “in connection with” their “place of employment.” In the absence of any legal authorities holding otherwise, this has been widely interpreted by the disability community to include the costs of AT purchased to facilitate employment.³⁷
    

2. Medical Care Expense Deduction

   Outside the employment context, individuals with disabilities seeking AT for education, for community participation, in retirement, or for a higher quality of life, have only one limited option. They can deduct some AT under the medical care expense deduction. However, as with this type of deduction,³⁸ the expenses are only deductible if they exceed a certain percent of adjusted gross income in any given year.

Tax Laws Summary: Falling Short of the Vision

Presently, most tax provisions are of extremely limited benefit and contain within their provisions significant restrictions which minimize their effectiveness.

The barrier removal deduction for businesses is limited to the removal of physical barriers and is not available to promote overall accessibility where non-physical barriers exist. In addition, the definition of what barriers qualify is narrowly limited by IRS regulations. Efforts to provide AT for effective communication or to enhance access to information would not qualify.

In terms of the disabled access credit, UD products would not be considered eligible, even where the purchasing business can prove that its intention was to increase accessibility for employees or customers with disabilities.³⁹

With regard to the Work Opportunity Tax Credit, it is doubtful whether members of the two specific groups represent more than a small fraction of individuals with disabilities who could be enabled to work through the application of UD or AT. It is up to the employer to decide to use the savings resulting from the credit for such technology.

Tax code provisions used to defray costs of AT purchases are severely limited. A minority of Americans itemize on their tax returns. Among low-income individuals and families, the proportion is smaller still. No means for obtaining the benefits of the deduction exist for those who cannot itemize.

The medical care expense deduction, apart from being available only to those persons who are in a position to itemize, requires that medical expenses are deductible only to the extent that they exceed 7.5 percent of adjusted gross income. Even when this cost threshold is reached, deductibility is difficult. It requires that the nature and purpose of the AT devices or services in question meet the statutory standard of “mitigating” an illness or “defect,” or restoring the function of a body part.

Even if all these barriers can be surmounted, use of any individual itemized deduction presents one additional, critical problem. These deductions are available only to the extent of taxable income in the year the deductible expense is incurred. Therefore, unless the individual with a disability has taxable income equal to or greater than the amount spent on AT, the full value of the deduction will be lost.

The Task Force has identified the following four major areas where it believes action is needed at this time: awareness; education and training; affordability of AT and AMT; and research and development.