R&D Tax Credit

Winner of the Most Misleading Name!

How Much Can I Get?

Average Tax Savings is $20,000-$40,000 PER YEAR for every $1,000,000 in total company payroll.

Companies may be eligible for THREE prior tax years, plus current year.

It's not about the size...

Technical based firms may qualify even if well below the typical payroll threshold.

The reason for this can be found in the way that the credit is calculated.
The credit is not based on total annual payroll. It’s based on total annual payroll multiplied by what percentage of that payroll is a qualified activity for the credit based on the IRS definition of Qualified Activities (see examples below).  This means that a $400k payroll for a technically based company could yield a higher tax credit than a $2.4M annual payroll of a general manufacturer.

About the Program

The Manufacturing Incentives benefit is a Federal program designed for Companies that perform Manufacturing in the U.S.

This program is listed under Section 41 or the IRC (Internal Revenue Code) and continues to be amended on an annual basis as the U.S. Manufacturing landscape continues to evolve.

This is an engineered based program that focuses on a company’s operations and processes in order to determine their qualification for incentives.
The Manufacturing Incentives benefit provides an avenue to receive ‘tax money’ back from prior years while also reducing current taxable income on a dollar-for-dollar basis.

IMPORTANT NOTE:
Section 41 was not designed exclusively for Manufacturers, although they are our most common client for R&D Tax Credits.

Qualification is based on activities performed by the company.

In fact, Architectural, Engineering, and Construction (AEC) often qualify at much higher rates than traditional manufacturers.

Who & What Qualifies

is much broader than most realize.

Activities and costs related with developing or improving a product and/or process often qualify for R&D tax credits.
Furthermore, engineering, design, testing, and programming are now included as Qualified Research Activities (QRE).

Industries that most commonly qualify are:

• Aerospace
• Agriculture
• Apparel & Textiles
• Biotechnology
• Chemical
• Civil Engineering

• Consumer Goods
• Construction
• Electrical Engineering
• Foundries
• Furniture Mfg
• Job Shops

• Machine Shops
• Mechanical
• Oil & Gas
• Product Development
• Plastics Manufacturers
• Pharmaceutical

• Semiconductor
• Software
• Telecommunications
• Tool & Die
• Food Sciences/Manufacturers

What Tasks & Expenditures Qualify

What is a QRE?

A QRE is a “Qualified Research Expenditure” as defined by the IRS in Section 41(b).

Basically a QRE is any eligible expenses for the credit, including wages, supplies and contract research expenditures.
For most companies, full-time product development engineers’ wages come to mind first and are easiest to recognize; however, a closer look at definitions and examples may lead to the inclusion of additional wages, supplies or contract research.

Here is a list of some tasks that can be performed within an organization that would qualify for the R&D Tax Credit

• Manufacturing / Fabrication / Engineering

• New Product & Process Development
• Developing New Concepts or Technologies
• Automating or Streamlining Internal Processes

• Software Development or Improvement

• Prototyping or Modeling
• Developing Tools, Molds, Dies
• Developing or Applying for Patents

• Design – Layout, Schematics, AutoCAD / Prototyping or Modeling
• Testing / Quality Assurance: ISA 900X, UL, Sigma Six, etc
• Integration of new machinery (CNC, SLA, SLE, etc) into existing process

What are the Benefits of an R&D Study?

• Immediate increase in company cash flow
• Tax Refund on Prior Years with Interest (May be eligible for 3 prior years, plus current year.)
• Carry Forward unutilized credit for future profitable years (up to 20 years).
• Credit average is over $25,000 per $1,000,000 in total company payroll

       (Consult a qualified tax professional for potential tax consequences.) 

Our Methodology

We utilize a team of highly qualified professionals including IP attorneys with engineering backgrounds and adheres to
the Comprehensive Project by Project Approach methodology as required by the IRS.

By following this methodology we qualify every applicable employee, activity, hour spent and corresponding wage paid in order to maximize the incentive for our client.We strictly adhere to the applicable sections of the code and provide first-in-class documentation to substantiate our findings.

We identify your benefit and work with your tax professional to determine your utilization, as they best understand your particular circumstances