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Research and Development Tax Credit Services
The federal government recognizes that innovation has always been a driving force in the American economy. Through the Research and Development (R&D) Tax Credit (which has expired and been extended 15 times to date) companies can realize a net benefit based on a percent of qualified annual research expenditures that exceed a base amount. In addition to the federal credit, many states offer local R&D tax credits, with parameters that closely mirror the federal program. Despite these opportunities, many companies fail to realize the full benefit of R&D credits because they either don't understand the full range of activities and expenses that qualify or don't develop adequate supporting documentation to sustain the credits under IRS or state examinations.
If you engage in the following activities, you potentially qualify for R&D tax credits:
- Developing new products
- Improving existing products
- Developing new or improved manufacturing or production processes
- Developing new production equipment
- Attempting to use new materials
- Designing and fabricating tools and dies
- Developing certain types of software
Our R&D tax credit specialists understand the nuances of the complex rules for qualification, have deep knowledge in the most credit-intensive industries, and have years of experience developing supportable tax credit claims. Our approach includes fully understanding your business and your research activities, scaling our tools and processes to fit your business, and partnering with you to ensure quality, minimize risk and make efficient use of everyone's time. We can help you maximize your investment in the future of your business.
Misconceptions about the federal research and development tax credit leave many companies paying more tax than required.
New life sciences businesses can earn up to a maximum tax benefit of $1.5 million in tax credits over three years.
TIGTA audit of 2017 R&D credit claims identifies deficient IRS programs and procedures for the qualified small business payroll tax offset.
The ability of automakers and suppliers to include tooling expenses in their R&D credit can create a tremendous benefit.
In two recent private rulings, a taxpayer who mistakenly failed to file Form 7004 and 1120 was allowed 120 days to make late elections.
The IRS concedes a Tax Court case where an automotive supplier treated tooling costs as qualified research expenses for its R&D tax credit.
New Jersey fiscal year 2019 budget increases conformity of the state research and development tax credit to the current federal provisions.
Qualifying New Jersey technology and biotech companies may sell unused NOLs and R&D credits to certain corporate taxpayers.
Tax reform bonus: Reduced R&D tax credit rate under section 280C(c)(3) actually increases while corporate tax rate decreases.
Major changes to the treatment of research and experimentation expenditures are coming in 2022 as a result of Tax Reform.