Most Companies Are Unaware
The US Congress established the Research & Development ("R&D") Tax Credit Program in 1981 to create an incentive for businesses that would encourage innovation and improvement by reducing tax liabilities. Annually, $ 5 billion in R&D Tax Credits are distributed and is mostly captured by the largest US companies. However, every US company is entitled these tax credits should they qualify. Most US companies – even companies advised by some of the nation's leading CPA firms – fail to take full advantage of this tax credit opportunity. In fact, experience indicates that over 95% of US companies are not even aware of these tax credits – which can be a substantial positive impact on cash flow when they are procured.
Substantial Cash Benefit Opportunity
Recovery of R&D Tax Credits represents "bottom line net after tax profit." For example, if your company operates on a 5% net income rate, a R&D Tax Credit of $ 100,000 is the equivalent of gross revenue of $ 2,000,000.
Your company may be entitled to recover a substantial portion of the resources expended in everyday operations, over and above the deduction of those expenses themselves. Your company will likely have qualifying R&D activities and can benefit in one or more of the following ways by identifying eligible expenses:
o An immediate source of substantial cash back from the
IRS by capturing & recovering prior year (s) tax credits;
o Reducing your company effective tax rate;
o A source of permanent tax savings & financial statement benefits;
o An increase in the market value, cash flows and return on equity of your company;
o A source of potential benefits for future R&D activities;
o A carry-forward of unutilized credits for a period of 20 years
Your Company Is Probably Eligible
If your company engages in any product design or process improvement activities, your company is qualified. The definition of R&D, in the tax sense, is much broader than scientists and chemists in white coats. Most companies are surprised to find out that many of their daily activities qualify for the R&D Tax Credit.
In general, if your company has expenses generated internally or through third parties that are towards developing new or improving existing products, developing new or improving existing processes, obtaining patents or developing new software for internal use or for sale outside of the company, then R&D Tax Credits are potentially available to you. Recent changes to the IRS code have made it less challenging for companies to qualify for these credits in that companies no longer have to create a business component that is 'new to the world' but rather a business component that is new or improved to the company itself.
These business components include products, processes, techniques, formulations, software, hardware, inventions … the items that are part of the foundation of companies. The qualifying activities that relate to these business components are the development of a new or improved function, performance, quality or reliability.
Along with many others, we have found that companies in the following industries generally have substantial R&D Tax Credit opportunity:
Agriculture Engineering Manufacturing
Biotech Environmental Oil & Gas
Chemical Finance Pharmaceuticals
Construction Food & Beverage Retail
Consumer Goods Health Care Software
Defense High Technology Telecom
Distribution Machinery Utility
Getting R&D Tax Credits For Your Company
Our team of senior level specialists at FortisTCS has gained extensive experience and expertise by working with a broad array of companies of varied sizes across a wide industry spectrum.
This has enabled us to develop a proven R&D Tax Credit framework which enables us to accurately identify, substantiate and capture the maximum benefits available under Federal & State R&D Tax Credit Programs.
Utilizing our proprietary methodology and framework, our specialists at FortisTCS have captured millions of dollars in tax credits and benefits for hundreds of companies.
For a more complete understanding of the benefits your company might realize and for a no-obligation
evaluation of your specific situation, please contact Travis Waack at 313.218.7651.