Research & Development Tax Credits

Research & Development Tax Credits

As a company, it helps to continue with research and development (R&D) to come up with new and improved products and processes – which translate into tax credits. But that doesn’t mean you have to be a scientist in a laboratory mixing chemicals or splitting an atom.

Don’t be one of those businesses that ignore R&D tax credits because you think you won’t qualify, or you fear an IRS audit because of your involvement. Let CSG Strategic Tax Consultants (CSG) help you eliminate these fears and generate significant cash flow through this very rewarding tax incentive.

Billions of dollars are available to U.S. companies that are involved with creating new or improved products, processes, formulations, inventions, software, and designs. CSG’s Research and Development Team understands this complex process and has the expertise to provide businesses with significant tax savings by quantifying and qualifying your research expenses and activities.

Find out if you qualify (CLICK HERE)
Research & Development (R&D) Tax Credit White Paper PDF

The R&D tax credit is a federal and state incentive designed to stimulate research and development activities within U.S. companies.  The credit has undergone several changes since its inception in 1981 and is available to companies in many industries. Some of the industries that may qualify for the credit are:

  • Ship Building & Repair
  • Apparel and Textiles
  • Manufacturing
  • Software/Application Design
  • Electrical Contracting
  • Architectural & Engineering
  • Food and Drug Manufacturing
  • Pharmaceuticals
  • Water Treatment
  • Aerospace
  • Government Contracting
  • Many others

CSG has helped myriad companies in a wide variety of industries obtain millions of dollars in R&D tax credits. Our dedicated team of CPAs and engineers will assist your organization with obtaining these credits by quantifying and qualifying the following:

Qualified Research Activities (QRA)
  • Software development
  • Process improvement
  • CAD modeling
  • Engineering new or improved products or processes
  • Testing and experimentation
  • Construction of prototypes
  • Technical meetings
Qualified Research Expenses (QRE)
  • Wages – W2 wages of those directly involved in the R&D process. Also includes wages of those supporting and supervising those directly involved in the R&D process.
  • Supplies – items consumed in the R&D process
  • Contractor Research – 65% of third party vendors assisting in the R&D process
Economic Risk & Rights of Contracts
  • Fixed fee contract
  • Time & material contracts
  • Cost plus fixed fee contracts
  • Performance clause analysis
  • Right of ownership analysis
Validity of “4 Part Test”

Test 1: Permitted Purpose – The activity must relate to new or improved business components in one or more of the following:

  • Function
  • Performance
  • Reliability
  • Quality

Test 2: Technological in Nature – The activity performed must fundamentally rely on the principles of one or more of the following:

  • Physical Science
  • Biological Science
  • Computer Science
  • Engineering

Test 3: Elimination of Uncertainty – The activity must be intended to discover information to eliminate uncertainty concerning the capability or method for developing or improving a product or process, or the appropriateness of the product design

Test 4: Process of Experimentation – Substantially all the activities must be elements of a process of experimentation involving:

  • Evaluation of alternatives
  • Confirmation of hypotheses through trial and error, testing and/or modeling
  • Refining or discarding of hypotheses
  • Contemporaneous Documentation
  • Project Narratives
  • Credit Calculations
  • Audit Support

Don’t let valuable tax credits go to waste…contact us now to claim yours!

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