Tom Cotton urges Treasury tax changes to boost operational technology cybersecurity
Summary
Sen. Tom Cotton urged Treasury to clarify research-credit eligibility for industrial security software, create a safe harbor for utility cybersecurity agreements and extend a lease-related exception to service providers to encourage OT security investment.
Key points
- Cotton told Treasury Secretary Scott Bessent that tax guidance may discourage investment in operational technology security.
- He asked Treasury to confirm that developing security software for industrial control systems qualifies for research credits under Section 41.
- He proposed a Section 7701(e) safe harbor treating cybersecurity monitoring agreements with public utilities as services rather than long-term equipment leases.
- He also asked Treasury to extend an existing lease-related exception to cybersecurity service providers.
- Cotton cited attacks on Minnesota community water systems and an Iran-backed campaign targeting programmable logic controllers as reasons to modernize OT; these are claims he raised in his letter.
Article Details
- Event Type
- Sen. Tom Cotton urged the Treasury Department to clarify and adjust tax-code provisions to encourage investment in operational technology cybersecurity and modernization.
- Impact
- The requested changes could make industrial-control-system security research eligible for Section 41 research credits, provide a Section 7701(e) safe harbor for cybersecurity agreements with public utilities, and extend lease-related exceptions to cybersecurity service providers. The article reports no Treasury response or implemented changes.