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Research & Development Tax Credit

Benefits

The credit at the federal level is substantial and may be enhanced through state initiatives based on location of business operations. The current federal credit is an amount up to 20 percent of the company’s qualified research expenditures in excess of a base amount that may be applied to current year tax liability, retroactively as a carryback to previous years or brought forward to help alleviate future tax liabilities.[1] The credit allows for a significant reduction to current and future federal and state tax liabilities with over $5 billion credited annually. Further, the government has recently expanded the number of companies that may qualify. The overall benefit provided to a company by this credit is multifaceted through current tax incentives, increased cash flow, higher market value, and lower effective tax rate.

For many clients there are extra incentives through supplementary state credits. For example, for Iowa clients there is added benefit with the current state credit up to 10 percent of qualifying activities within the state and is regulated based on federal requirements (so, there is minimal extra work required for this added benefit). The Iowa credit is in ADDITION to the federal credit and makes the determination of qualification that much more beneficial to the taxpayer. This credit alone may be extremely lucrative, as in 2009 there were 182 corporate claims that totaled $45.3 million and 682 individual claims that totaled $3.3 million. This credit may be claimed as either tax credit against current tax liability or as a refundable credit, almost half of which has historically been claimed by small businesses.[2]

Taking into consideration the combined federal and state tax credits that are available, it would be advantageous for any company that believes that it may qualify for such benefits to contact our firm to review the business operations and projects.

Client Services

Any company with qualifying research activities can benefit by working with Williams & Company’s R&D Tax Credit Group to identify and help substantiate your qualified research expenditures and then properly document the credits on the business tax filings. Our tax professionals, along with outside engineering professionals through the partnership with Titan Armor, take part in assisting taxpayers in preparing the supporting documentation to provide the burden of proof necessary to receive the R&D credit.

At Williams & Company, we always keep the client’s best interests in mind. As a Midwest regional CPA firm, we will build a reliable strategic alliance with small, mid-sized or enterprise-level businesses. Our R&D Tax Credit Group focuses on the qualification and quantification of R&D tax benefits for companies in a variety of specific industries, allowing us to develop the kind of specialized expertise that helps us serve our clients best. Williams & Company will either work alongside the company's existing tax advisors to ensure the credit is properly documented and claimed to the fullest extent possible or, if the client prefers, will entirely complete and file all related and required business tax returns and documents. We assist you in compiling the high-level contemporaneous documentation and defensible reporting so that businesses receive the tax credit they deserve.

Audit Defense & Partnership

Through Williams & Company's partnership with Titan Armor, any R&D credit asserted will be subject to complete off-site audit defense provided by Titan Armor’s engineers and specialists at the federal and state levels at no charge. Their experts, along with the Williams & Company R&D Credit Group, are knowledgeable regarding all current laws and regulations being utilized in assessing taxpayer claims for the R&D Credit. Because of our experience with the IRS, clients can rest assured that we are current with best practices.

This partnership between Williams & Company and Titan Armor benefits the client in numerous and important ways, including, but not limited to, decades of experience, countless and continual IRS defenses that keeps us up to date on new or evolving issues, company consultation savings, and user friendly and efficient software development that provides bullet-proof documentation to verify the credit and stand up against any audit.

Industries & Qualifying Activities

A broad range of common practices in many industries will qualify for the R&D credit, which includes the work of numerous types of employees at different levels of the process. Just some of the qualifying industries that are largely prevalent in this region, include: agricultural, dairy farming, engineering, feed mills, manufacturing, food and consumer goods, chemical, construction and contracting, poultry, software, electronics, telecommunications, life sciences, and natural resources.

Within almost every business is an element of innovation through the need to improve and evolve processes, products, or operations to stay competitive in a continually advancing market. In relation to this, the R&D credit is available for several related activities, as a wide-ranging list that is not inclusive:

  • developing or designing a new product,
  • research and application of research,
  • designing and evaluating alternatives,
  • product modifications,
  • related engineering activity,
  • systems and integration analysis,
  • experimentation and development, and
  • associated consultation expenses.

Activities individually qualify through the application of a four-part test, consisting of the following elements:

  1. New or Improved Business Component, explaining the application, utilization or capability of the new or improved business component
  2. Technical Uncertainty with the specific issue being addressed
  3. Technological in Nature and the type of engineering or science relied incorporated; and
  4. Process of Experimentation.

Our services, along with the partnership with Titan Armor, consists of experts focused on local industries and have developed and employed individuals who have educational backgrounds and hands-on experience within specific industries.

Further Information

Learn more about the R&D tax credit and whether or not your company is qualified. We urge you to explore our website to discover our unique process and the advantages to claiming your R&D tax credit through the use of Williams & Company's personal services and expertise. Please contact Williams & Company’s R&D Tax Credit Group directly to discuss the opportunities, available at:

Michael R Miranda CPA QKA
mmiranda@williamscpas.com
(605) 271-3273

Or just stop in at any of our conveniently located offices in Sioux Falls and Yankton, SD or Sheldon, Spencer, Le Mars, and Onawa, IA for more information.


[1] There is a reduced rate for a simplified method that the President has proposed a permanent rate of 17 percent.
[2] Statistics taken from documents located on http://www.iowa.gov/tax on April 16, 2012.