Federal and State Research Credits
The Research Tax Credit laws have undergone dramatic changes since their inception in 1981. The credit became permanent for the 2016 Tax Year with very favorable new rules, so now is the time to put systems in place or update your existing filing methodology. You can rest assured that ThreeFive will file detailed, supportable claims for refunds or credits owed to your company. Freeing you up to do what you do best is what we do.
The Backdrop: You’ve worked hard to develop a new or improved product or process to get it ready for sale, lease or license. Sure, your company has expertise in your chosen field, so you knew you would create it eventually. But it wasn’t easy, it wasn’t simple and it took time. Your development may have involved:
• New Software formulas, methods or techniques with unique coding and logic involving front end, back end or middle ware, test and staging prior to release;
• CAD Design, CAM, CNC machining, test and manufacturing process creation of aerospace, automotive and other manufactured components;
• Circuit Design and manufacturing of boards, integrated circuits, chips, processors and the processes to create them;
• Materials development using metallurgy, chemistry, and other scientific methods;
• Plastics to include molded, rotomolded and extruded components;
• Pharmaceutical development of new molecules, INDs, Phase I – IV trials;
• Safe harbor development resulting in patents or plant variety protection.
Opportunity: Lab coats welcome, but not required! Any company with new or improved products/processes, software, or research expenses on the books may qualify. Not sure if you qualify? ThreeFive professionals know the rules, regulations, pronouncements and how to apply them to your situation. Determining the correct amount of qualified research expense (“QRE”) can be a time consuming task. ThreeFive simplifies and speeds the process to keep your personnel on the job while maximizing your benefit. ThreeFive specialists speak the language of your engineering and development personnel, and have decades of tax, contracting and project experience to quickly determine qualified research activities and associated expenses that qualify for the credit. Using alternative approaches and unique processes, we create nexus between qualified activities and personnel doing the research.
Implementation: Research Credits are available for open tax years, so it’s possible to obtain refunds from previously paid tax returns. The process begins with identification of potential qualified business components and the personnel who create them. ThreeFive uses interviews or surveys of key individuals most familiar with the activities of the organization as well as analysis of contemporaneous documentation, project and accounting data to establish qualification. The next step involves quantification where the allowable expenses are put through the various formulas to determine the most favorable outcome for both Federal and State tax credits, where applicable. Lastly, the ThreeFive team of specialists prepares the documentation necessary to explain the qualified nature of the activities and finalizes the audit support package.
Result: Upon completion of a research credit study, our clients will benefit from tax savings and a lower effective tax rate. Our fee is based on that result.