Have you attempted to improve your revenues and margins by adding to and improving your product list? Do you continually fight competitive pricing pressures by working to improve your efficiency and reduce production costs? If you answered yes, the federal government wants to help you finance these activities.
The Research & Development Credit is a direct reduction of the tax liability on your corporate income tax return. Expenses related to activities companies do every day to stay competitive can generate credits. This includes creating new products, improving existing products, and changing your products to meet specific customer needs. The Internal Revenue Service recognizes that many of these changes are evolutionary rather than revolutionary in nature. Therefore, it is not necessary for the improvements to be significant enough to be patentable. The only requirements are that the improvements involve:
- Technology – a hard science such as computer science, engineering, chemistry, or physics
- Some uncertainty at a project’s outset
- Development that uses a process of trial and error or experimentation
- Research & Development Tax Credit Features and Benefits:
- Identification of maximum tax credits for research and development efforts for the past three years
- Potential to substantially reduce research and development costs
- Increased cash flow
- Education of personnel on what tax law considers a qualified research and development expenditure
- Improvements to system documentation substantiating eligibility for research and development expenditures and credits in case of IRS or state examination
- Expert advice from experienced tax professionals whose sole focus is helping manufacturers succeed
- Research & Development Tax Credit Deliverables:
- A technical audit that identifies what activities qualify for the Research and Development Tax Credit included under both federal and state codes
- Assistance in developing internal procedures to help track Research and Development expenses for use in future years
- Amendments to any tax returns to receive the credit for prior year credits. (The statute of limitation allows a company to go back three years and amend the prior years’ returns.)
How May We Help You?
For answers to Research and Development Credit questions or other questions on our full range of tax consulting services, call Luis Rivera, (213) 412-2000, e-mail lrivera@etaxgroup.com or visit our website at www.etaxgroup.com.
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Encore Tax Consulting Group, Inc.
811 Wilshire Boulevard • Suite 1805 • Los Angeles, California 90017
Main 213.412.2000 • fax 213.412.2001
www.etaxgroup.com