For the first 12 days of February, the IRS issued daily warnings about its “Dirty Dozen” list of tax scams. They included identity theft, falsifying income and inflated refund claims.
One that stood out to us here at Concannon Miller was research credit scams. We’ve helped a lot of companies obtain R&D Tax Credits, also known as R&E or Research and Experimentation Tax Credits.
The IRS warning about R&D Tax Credits centers on the credit’s misuse. Improper claims for the research credit generally involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses, the IRS said. The IRS also sees improper expenses contained in some claims for the research credit.
The IRS has a four-part test to issue R&D Tax Credits. The rules can be complex, but we’ve helped many companies determine if they qualify.
A formal study also must be conducted to obtain R&D Tax Credits. We also help companies conduct tax/benefit analysis to determine if the tax savings will exceed the cost of the study.
While obtaining R&D Tax Credits is an involved process, it can be worthwhile for a qualifying project. Inventing a new product – or even researching a new product – can qualify companies for a tax credit for qualified expenses, including wages for qualified services, supplies used in R&D activities and up to 65% of contract services.
READ MORE: Lehigh Valley Innovators Could Benefit from R&D Tax Credits
The federal R&D Tax Credit was recently made permanent by Congress, allowing for increased tax planning opportunities. Here in Pennsylvania, the state also offers Research and Development Tax Credits in addition to the federal benefit.
So don’t fear filing for a R&D Tax Credit – just make sure you get a high-quality assessment to determine if you qualify. Call our R&D team today to learn more or get an assessment of whether you may qualify for this credit, and if so, an estimate of what that credit will be.
