No, the R&D Tax Credit has been available since 1981. However, because it is a specialty area within the tax code that is very complex, many companies have never taken advantage of this lucrative tax credit, even though they qualify. The good news is that in the past few years, there has been significant clarification to the R&D tax code that establishes a more lenient interpretation of what qualifies.
The relationship with your existing tax advisor/ CPA should not be affected. The R&D Tax Credit is a highly specialized area. Black Line Group’s R&D tax specialists work in this one area and this one area alone. That is another way of saying that Black Line Group works with your current tax/CPA firm. It is similar to the relationship of a primary care physician and a specialist. While your current tax advisor is fully capable, they are not likely specialists in the R&D Tax Credit area. The Black Line Group R&D specialist is willing to coordinate the delivery of the R&D study with your tax/CPA firm. We are not in competition and are not looking to replace any existing relationship. Black Line Group just wants to maximize your R&D tax credits.
Yes, you may qualify for the R&D credit without developing new products. Products and process enhancements/improvements may also qualify. Below is a list of activities that may qualify for the R&D Tax Credit:
Developing new or improving existing production/manufacturing processes
Developing formulations – drugs, food or chemicals
Assisting customers with design or development
Designing or customizing equipment used in the production process
Developing or applying for patents
Designing tools, prototypes, molds or dies.
Yes, you may qualify for the credit without increasing R&D spending year after year.
A typical R&D tax study takes 10-15 hours of your team’s time. The exact amount depends on your company’s structure and the amount of R&D spending your company is currently doing. Usually members of the finance and engineering/R&D personnel should anticipate spending some time with our consultant.
It typically takes three months to receive the credit after the forms are filed. However, you may realize a cash benefit even sooner if the R&D Tax Credit reduces a tax balance currently due (i.e. estimated tax payments).
Since the R&D Tax Credit is available for the current year and the three prior years, there is a chance that postponing the study to a later date may result in lost credits from the earliest year. These credits are lost forever!
Black Line Group charges on a time and materials basis. On average, a typical engagement can take between 40 and 150 hours depending on how many years are included in the scope of the project. Black Line Group will be happy to discuss pricing to provide you with enough information to make the best decision for your business.
When Congress enacted the R&D (research and development) Tax Credit in 1981, it fully intended for the credit to be used by businesses of all sizes. However, this did not occur for a variety of reasons. So, in the early days, the only companies taking advantage of this benefit were big businesses.
Today, after 27 years of changing