Business Investment Tax Recovery
One of the Most Lucrative Tax Credits Available for Business
Encouraging Innovation in Businesses Across the United States
The U.S. tax court and states alike have ruled in favor of business activities that make jobs faster and more efficient. This could be anybody from a contractor who uses new materials to create green, energy-efficient improvements, to a manufacturer improving production processes through investment in new technology.
The R&D tax credit is now available to any U.S. business that spends time and resources on new development, improvements, or technological advancements in an effort to improve upon its products or processes. The credit could also be available to American Business owners that have improved upon the performance, functionality, reliability, or quality of existing products or trade processes.
Business Investment Tax Recovery
You've invested in your business. It's time to claim your credit.
The R&D tax credit is available to any U.S. business that spends time and resources on new development, improvements, or technological advancements in an effort to improve upon its products or processes. The credit can also be available to American Business owners that have improved upon the performance, functionality, reliability, or quality of existing products or trade processes.
What's the benefit?
The R&D tax credit creates money that goes back into your company’s pocket to fuel further innovation and growth.
Why haven't I heard of this?
The credit has been around since 1981, but many companies couldn't take advantage of the tax incentive until 2015.
What Type of R&D Activities Qualify?
Technological in Nature
Activities must fundamentally rely on the principles of physical or biological science, engineering, or computer science.
Permitted Purpose
Activities must be performed in an attempt to improve the functionality, performance, reliability, or quality of a new or existing business component.
Eliminate Uncertainty
Activities intended to discover information that could eliminate technical uncertainty concerning the development or improvement of a product.
Experimentation Process
All of the activities must include a process of experimentation including testing, modeling, simulating, systematic trial and error.
How Much Money Have You Left on the Table?
Qualifying Industries
Many misconceptions surrounding the new regulations are that it is difficult to apply for the credits and that it is restricted to a small group of industries. This could not be further from the truth. The business tax incentive process is easier to navigate and you may be able to go back three years to file for credits that were earned but not claimed.
Now is the time to work through the Business Qualification Process and see if you have left some valuable business incentive credits on the table.
You Could Be Leaving Thousands
of Dollars Behind
Background on the R&D Tax Credit
In a temporary effort to boost the economy in 1981, the federal government sought to use the passage of the Research and Experimentation tax credit to reward businesses for investing in research.
With the rapid changes in technology in the past decades, companies across multiple industries have seen increasing challenges to constantly innovate their products or processes to compete across a global economy. Business owners small and large understand the expensive and time-consuming risks that drastic innovations pose and thus, often failing– yielding no financial return on investment.
Recognizing the need to create jobs domestically and maintain global economic competitiveness, Congress has extended the R&D tax credits more than a dozen times over subsequent years, finally making them permanent with the passage of the PATH Act of 2015. In addition to becoming permanent, the Protecting Americans from Tax Hikes act expanded R&D credit provisions to start-ups and small businesses. The R&D tax credit is now available to any U.S. business that spends time and resources on new development, improvements, or technological advancements in an effort to improve upon its products or processes. The credit could also be available to American Business owners that have improved upon the performance, functionality, reliability, or quality of existing products or trade processes.
Pathway to the PATH Act of 2015
2001
2006
2014
2015
2016, 2018
1981
Original Enactment of the Federal R&D Tax Credit
This credit was developed to reward businesses for investing in their research. Activities qualifying for the credit were limited to creating or producing a product or process that was new to the world. The definition of the research was further defined under Sect. 174 (Discovery Rule); due to this definition, only a small percentage of companies were able to qualify.
The regulation change to eliminate the "Discovery Rule" from R&D tax credit qualification requirements now benefits businesses it alters the activities that now qualify for the credit.
"Discovery Rule" is Eliminated
The Alternative Simplified Credit (ASC) is Enacted
This provided flexibility to business in calculating credit amounts
Controlled group credits allocation amongst members was charged with the finalization for Sect 174; temporary regulations also allow ASC on amended returns for years a taxpayer had not previously claimed a credit.
Finalization for Sect 174
Passing of the Protecting Americans from Tax Hikes Act (PATH Act)
The R&D tax credit became permanent after the passing of the Protecting Americans from Tax Hikes Act (PATH Act).
The Alternative Minimum Tax (AMT) turn-off was enacted for businesses with $50 million or less in gross receipts allowing for more businesses to take advantage of the R&D tax credit.
Tax Reform Legislation Is Implemented
The R&D tax credit remains one of the most lucrative tax incentives for U.S. businesses.