How Much Have You Over Paid?

In a temporary effort to boost the economy in 1981, the federal government sought to use the passage of the Research and Experimentation tax credit to reward businesses for investing in research.

With the rapid changes in technology in the past decades, companies across multiple industries have seen increasing challenges to constantly innovate their products or processes to compete across a global economy. Business owners small and large understand the expensive and time-consuming risks that drastic innovations pose and thus, often failing-- yielding no financial return on investment. 

The R&D (Research and Development) tax credit is government sponsored  (Look up US IRS SEC 41 and the Path ACT 2015 and has been available since 1981). 

The biggest reason for small businesses not taking advantage of the R&D Tax Credit is self- censoring. Prior to the PATH act, the traditional method of calculating and filing for the credit was a process that wasn’t worth the effort for small business owners and their tax advisors alike. Now, thanks to the new broadened terms and calculation methods, along with the ability to lookback 3 years and amend returns, business owners are putting substantial dollars back into their business.

By going through the Business Qualification Process with your consultant and by providing our CPAs with pertinent tax filing information in accordance with your business structure we can conduct a feasibility study "Free of Charge" to see if your business qualifies.

Recognizing the need to create jobs domestically and maintain global economic competitiveness, Congress has extended the R&D tax credits more than a dozen times over subsequent years, finally making them permanent with the passage of the PATH Act of 2015. In addition to becoming permanent, the Protecting Americans from Tax Hikes act expanded R&D credit provisions to start-ups and small businesses.

The R&D tax credit is now available to any U.S. business that spends time and resources on new development, improvements, or technological advancements in effort to improve upon its products or processes. The credit could also be available to American Business owners that have improved upon the performance, functionality, reliability, or quality of existing products or trade processes.

As of January 1, 2016 Eligible Small Businesses (ESBs) can use the credit to offset the Alternative Minimum Tax (AMT). An ESB can be a non-publicly traded corporation, partnership, or sole proprietorship with annual revenues under $50 million for the three tax years prior to the current year and credits can be retroactively captured subject to special rules under section 448(c)(3).

Section 41 of the Internal Revenue Code lays out the rules and regulations surrounding the R&D tax credit. Many misconceptions surrounding the new regulations are that it is difficult to apply for the credits and that it is restricted to a small group of industries. This couldn’t be further from the truth. The goal of the PATH act is to encourage innovation in businesses across the United States. The U.S. tax court and states alike have ruled in favor of business activities that make jobs faster and more efficient. This could be anybody from a contractor who uses new materials to create green, energy efficient improvements, to a manufacturer improving production processes through investment in new technology.

Aerospace
Agriculture
Apparel
Architecture

Automotive

Biotech/Life Sciences

Breweries/Wineries

 Coatings and Adhesives

Chemical

Commercial Bakeries

Construction

Distribution

Electronics

Energy
Fabricators
Food Processors
Food Products
Furniture Makers
HVAC
Insurance
Jewelry Design
Job Shops
Medical Devices
Oil and Gas Refineries
Package Design
Pharmaceuticals
Plastic Injection Molding
Research and Development Facilities

 Telecommunications
Tool and Die
Transportation