FEDERAL INCOME TAX SERVICES
R&D Tax Credit Services
The R&D Tax Credit is a significant and immediate source of cash for many companies. Historical IRS regulations have made qualifying for the R&D tax credit more appealing to many companies and industries. These regulations:
- Dramatically broaden the traditional tax definition of “R&D”
- Apply retroactively to prior tax years
- Generate refunds of previously paid federal and state income taxes
- Provide greater flexibility in certain record-keeping/documentation requirements
- Expand the definition of internal-use software
The opportunity for sales/use tax reduction is also available prospectively. If Historically, the majority of companies believed that the R&D Tax Credit study was not applicable to them due to the following:
- “We have not performed any R&D, it doesn’t seem significant and we have no documentation or cost accounting systems to support any qualifying costs.”
- “My company doesn’t perform any R&D. My competitors have similar products and offerings. The R&D Credit is not applicable to my business.”
- “My company is in the financial services industry. We would not qualify for the R&D Credit.”
- “We already claim the R&D credit every year. Why do an R&D Study now?”
- “We performed R&D more in past years. This presents a barrier for claiming the credit today.”
- “The cost of hiring experts to gather the necessary documentation is intrusive and expensive. My employees cannot take time to focus on this.”
- “The R&D tax credit rules seem too complex and not meant for me.”
Qualifying R&D Activities
Many companies overlook qualifying R&D expenditures as defined by the tax law. Many day-to-day operations such as engineering, production, quality assurance, sales, marketing, purchasing and information technology all qualify for the R&D Credit. If your company is involved in any of the following activities, you may be able to retroactively claim the R&D credit for federal and state income tax purposes, obtain significant cash refunds and establish the methodology to claim the credit in future years:
- Manufacturing products
- Developing new products, processes, formulas, software, techniques, etc.
- Improving existing products, processes, formulas, software, techniques, etc.
- Creating more reliable products, processes, formulas, software, techniques, etc.
- Developing prototypes or models, including computer generated
- Designing tools, jigs, molds, dies
- Applying for patents
- Testing for quality certification
- Testing new concepts
- Sourcing new raw materials
- Developing new technology
- Improving existing or building new facilities
- Employing outside consultants and/or contractors to do any of the above activities
Think assists with the following services:
- Assessing R&D expenditures identified for financial reporting purposes.
- Analyzing current R&D projects qualifying for the credit.
- Analyzing technical issues and itemization of qualifying costs.
- Organizing, distributing, collecting R&D surveys / questionnaires.
- Conducting and documenting detail interviews with company personnel.
- Gathering the required contemporaneous documentation to support qualifying wages, supplies and contractor costs.
- Conducting statistical sampling of projects as required including sampling, statistical validity, regression analysis, data mining/analysis, modeling, estimation, probability/risk analysis, .etc.
- Providing IRS and state audit representation including response to IDRs.
- Assisting understaffed tax departments and CPAs with experienced temporary loan staff.
Contact us to learn more
Phone: (714) 434-6700
Fax: (714) 640-8645