We provide engineering-based studies for companies to receive Federal R&D Tax Credits for IRS qualified R&D activities on a performance basis which provides a dollar-for-dollar credit on taxes paid or owed.
• Programs available for manufacturers, software firms, engineering companies and high-tech organizations which have engineers &/or designers on staff our outsource these functions on-shore.
• Credits are based on your company’s payroll (eligible firms have a payroll of $500K or more).
• It’s estimated close to 70% of manufacturing firms qualify due to relaxed rules on qualification to include SMEs (small to medium enterprises) from past programs where incentives were geared for large, publicly traded companies.
• Many engineering and software development firms qualify. Obvious qualifiers are pharmaceutical, chemical, and biotech firms.

“We need to use every tool available to encourage growth, investment and job creation in our economy. The Research Credit is a significant element of President Bush’s tax plan – a plan I fully support and am committed to enacting as quickly as possible. The regulations issued by the Clinton Treasury on January 3, 2001 limited the value of the current Research Credit for those who have chosen to rely on it.” — former Treasury Secretary Paul O’Neil

If your company has invested time, money and resources to the advancement and improvement of your company’s product or processes then you likely qualify for the Federal R&D Tax Credit Incentive Program. Many firms, however, are unaware of how or even what to qualify; thus, the opportunity goes unclaimed. One of the qualifiers we look at is known as Section 41 Credit which is an incentive to keep these qualified R&D activities in the U.S. Great thing is we can go back three open tax years to find cost recovery.

The R&D Tax Credit Opportunity
• A hidden and immediate source of cash for many small and mid-size companies.
• A significant reduction to current and future year’s federal and state tax liabilities.
• Over $5 Billion in federal R&D tax credit benefits are given out annually.
• Approximately 80% of the $5 Billion goes to a few of the nation’s largest companies.
• Every successful company is potentially eligible for an R&D tax credit of some amount many companies are unaware their day-to-day operations can qualify for the R&D Credit.
• The 20% Research tax credit is not a deduction. It is an actual dollar-for-dollar credit against taxes owed or taxes paid. Plus the taxpayer may be able to expense all such costs in the year incurred.
• A business can take the credit for all open tax years – generally the last three, or four years plus the current year.
• Additional years may be available if taxpayer is in a net operating loss or alternative minimum tax position.
• Tax credits may carry forward 20 years.

Why should my business conduct an R&D Study now?
The U.S. offers some of the world’s richest R&D tax incentives but chances are you’re not taking advantage of them and getting the cash and assistance with cash flow you deserve. As the pace of your business accelerates and competition increases, you may be more likely to overlook this source of cash because you lack the time, resources or expertise needed to identify and manage R&D tax credit claims. Prior to December 2001 the requirements necessary to qualify for the R&D tax credit were rather difficult to obtain. However, in December 2001, the Bush Administration issued IRS regulations which made it significantly easier to qualify for the R&D tax credit.

The new regulations are in harmony with the intent of Congress and are much more taxpayer friendly. They reflect a profound change in the position of the IRS. The new regulations make it:
• Easier for a broader array of companies to qualify their activities as R&D
• They provide greater flexibility in certain record keeping requirements
• They significantly expand the definition of internal-use software characteristics

What Qualifies as R&D? Common R&D eligible activities include:

  • Pre-production design and engineering of a new product or improved existing product, process, or production improvement
  • Prototyping and patent applications
  • Experimenting or testing new concepts, formulations, materials, tools, and procedures
  • Software development for internal use or sale
  • General trial and error experimentation

Many taxpayers tend to regard “R&D” as an activity associated solely with high-tech, biotech and pharmaceutical type companies. We have found many of our clients tend to regard their own efforts to make new, lighter, stronger, less expensive, more reliable products, or to make more precise, more economical and more versatile processes as “just doing my job”, when in fact they have been performing R&D qualifying activities all along.

If your Company is involved in any of the following activities, you may be able to claim the R&D tax credit:

• Manufacture products
• Develop new, improved, or more reliable products / processes / formulas
• Develop prototypes or models (including computer generated models)
• Design tools, jigs, molds, and dies
• Develop or apply for patents
• Certification testing
• Apply for patents
• Test new concepts
• Development of new technology
• Trying new materials
• Adding new equipment
• Environmental testing
• Developing or improving production / manufacturing processes
• Developing, implementing or upgrading systems and / or software
• Developing production control software
• Improving or building new manufacturing facilities
• Automate internal processes
• Paying outside consultants / contractors to do any of the above stated activities

Why We Are Different?
We utilize a comprehensive approach in both quantifying and qualifying credit amounts, which is the recommended approach by IRS (Project by Project Approach). Thus, for example, instead of identifying and documenting only 3-5 of the biggest projects conducted by a client in prior year, we identify EVERY qualifying activity and tie it to every employee, time and wages and the corresponding sections of the code and appropriate legal documentation that substantiates the credit.

Our team consists of engineers, tax and IP attorneys from a variety of disciplines who have extensive experience on performing R&D studies of various industries. The result is that we can maximize the credits and most importantly defend the credits. As the IRS Agents reviewing the R&D Credit are also engineers, it is critical that the client has experienced engineers on their side to defend the credit.

We charge a fixed fee depending upon size and scope of project. We would provide you or your client with a free consultation and feasibility report to determine the cash benefit before moving forward. All of our services are performance based (contingency basis) so if we cannot find savings or cost recovery you pay nothing.

If you work for a company in the U.S. which manufactures products and think you qualify based on the above description, do not hesitate to contact us.

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