Consider this, over $9,000,000,000 (that’s $9 BILLION) of §41 Research Tax Credits benefits are given out annually. In addition, State Research Tax Credits are available in many states. Total R&D tax credits exceed $16 billion. The Research Tax Credit has been available since 1981 and was finally made a permanent part of the Tax Code in Dec, 2015.
Every successful company is potentially eligible for a Research Tax Credit of some amount. This is especially true for companies with increasing revenues and expanding markets.
There is a perception among many business people that only high-tech activities qualify for the R&D tax credits. People in many industries are surprised to discover that much of what they do to keep their businesses profitable and growing also qualifies them for significant tax credit benefits. Opportunity is especially broad for manufacturing operations. Creating new and improved products, developing new processes or improving existing processes, implementing new manufacturing systems and writing software for internal use are just some of the expenses that qualify for the Research Tax Credit. Under current IRS rules, these activities – and many more that are not listed above – can result in substantial Research Tax Credit dollars if they are properly tested and documented.
Another challenge businesses face in obtaining their deserved tax credits is the complexity and illogical nature of the tax credit regulations. Reality is that tax laws are not written by businessmen. Once written and passed by Congress, tax laws are transformed into elaborate tax regulations by the IRS. These regulations are the official interpretation of the law.
Tax advisors that do not specialize in the Research Tax Credit, find it difficult to correctly interpret the regulations and to assist their clients in claiming Research Tax Credits. Frequently, tax advisors mistakenly conclude that clients do not qualify for Research Tax Credits when in fact they do. Consequently companies often lack resources to provide the requisite mechanism for documenting and keeping their deserved tax credits. Historically over 80% of the 16+ billion dollar annual benefit from the Research Tax Credit goes to a few of the nation’s biggest companies with huge legal and accounting resources. This is not what Congress intended.
Contact RIX Technology – firstname.lastname@example.org or 206.855.1700