10 Things to Look for When Selecting an R&D Tax Partner

Aug 7, 2018 9:00:00 AM

R&D tax partner

When searching for an R&D tax credit expert, keep in mind that the foundation for a rock-solid R&D study is built from deep hands-on industry experience. While it’s important to know exactly what qualifies, (you don’t want to leave client’s money on the table) it’s equally important to know what doesn’t qualify. And, unless you have lived in the shoes of your client, it can be nearly impossible to know what to even ask!

As an example, without deep knowledge of the manufacturing life cycle, how can you have a credible conversation with the various stakeholders of a sheet metal shop? Ever tried to bluff your way through a process discussion with a 60 year-old second generation owner who has been in the shop since the day they could walk?

Therefore, it’s extremely important that you have a partner who not only understands R&D tax credit laws, but also the industry it applies to. With that in mind, here are 10 things to look for when choosing an R&D tax provider.

Signs of a quality tax partner

1. Experience

There's no substitute for experience. Choose a tax partner with hands-on expertise in your industry and ask for references to verify the firm's ability to provide effective tax credit solutions.

Check out the video below as Dan Digre of MISCO Speakers discusses the importance of industry knowledge in relation to the tax credit.

2. No-obligation assessment of your situation

A quality tax partner should provide a tax credit estimate and fixed-fee quote. Per IRS Circular 230, tax return preparers cannot charge a fee tied to the size of your tax refund, or to how many write-offs they find. So, if a firm presents fees based on a percentage of the tax credit, treat it as a major red flag and look for other options.

3. Representation if audited

The last thing you need is a tax partner that will hang you out to dry when things turn sour. Ask about a firm's policy of representation if a tax audit should occur, and make sure those terms are explicitly included in any contracts you sign.

4. Relationship with your CPA firm

Strong partnerships will always prove more valuable in the long-run. Ask your CPA for recommendations on R&D tax partners, but always do your own research to make sure they're a good fit for your organization.

5. Industry association membership

A firm's reputation in the industry matters. Membership in industry associations can be a positive indicator of a firm's quality and can act as a check against unethical practices.

6. Clean search results

This may be the simplest way to determine if a firm is the wrong choice for your organization. Conduct a search and look for any red flags regarding ongoing lawsuits or allegations of inappropriate behavior.

7. Interested in helping you build a better business

Your tax partner's goals should go beyond just maximizing your R&D credits. Ask how they can enhance the value of your business, and how they would recommend you invest the credit to spur growth and become more profitable.

8. Proven, well-documented, and consistent process to conduct an R&D study

Consistency is key. Don't be afraid to ask for details on how the firm would conduct an R&D tax credit study and what kind of process they employ to ensure you take advantage of every opportunity available.

9. Share your values

Alignment of values is the surest way to avoid unwanted conflicts down the road. Compare your mission, vision, and values to that of prospective firms. Pursue those that present the strongest alignment and avoid those that don't seem to share your sensibilities.

10. Enjoyable to work with

Working with your tax partner should be a positive experience, not a headache. Although profitability often trumps all other considerations, personal relationships are still important. You may be working with this partner for a long time, you might as well enjoy it.

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