R&D Tax Credit Opportunities for the Plastic Injection Molding Industry

R&D Tax Credit Opportunities for the Plastic Injection Molding Industry

Posted by William Mehi on 07.26.17

Many companies that manufacture plastic injection molds do not realize that their business is filled with research and development (R&D) activities that qualify for valuable tax credits—credits that could be used to reinvest in their business. Do your day-to-day activities include research, experimentation, streamlining and invention? Do you conduct testing to improve efficiency and quality? If so, you may want to consider applying for R&D tax credits.

Qualifying activities include:

  • Reducing the amount of plastic used in a molding cycle
  • Conducting first article test runs by engineers, tool makers and operators
  • Inventing, prototyping, fabricating and/or testing molds and tooling
  • Analytical testing of experimental or improved products
  • Creating a material application study
  • Conducting injection time analysis
  • Performing a gate seal study
  • Assessing cavity balance
  • Performing a rack and hold pressure study
  • Engaging in quality assurance, such as inspections and quality testing (including checking dimensions, visual inspections, non-destructive testing and leak testing)

Given that so many activities qualify for R&D tax credits, it is surprising that only one-third of companies actually apply for the credits. There is still a misnomer that the R&D tax credit only includes basic research. In fact, it also includes applied research. As a result, even companies that apply for R&D credits often under-report the full amount of the credits they have earned.

Expanding the Playing Field

Recent changes in the law actually expanded the number of companies that can be eligible by expanding the playing field to smaller companies. With the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015, the R&D tax credit became permanent. Congress subsequently made provisions that benefit eligible small businesses that pay Alternative Minimum Tax (AMT). This, in turn, expands the credit for many other small-to-midsize businesses.

Companies with $50 million and less in average annual gross receipts, based on the three preceding tax years, may apply the R&D credit against the AMT. This was welcome news to shareholders of qualifying pass-through entities, such as S corporations and partnerships with an AMT liability.

Watch this video: How to Qualify for R&D Tax Credits: The Four Part Test

How Do I Apply?

R&D tax credit eligibility requirements are clearly defined—companies seeking to take advantage of the credit must be prepared to identify, document and support their qualifying activities. At Tax Point Advisors, we understand that many business owners feel intimidated by the process. We can help.

Tax Point Advisors, has expertise in working with companies in the plastic injection molding industry that qualify for R&D tax benefits. With experts placed nationally, we conduct local, thorough on-site assessments for every study—then, we write a bullet-proof, audit-defensible study report.

Find Out if Your Activities Qualify

The R&D tax credit can be a lucrative incentive for businesses in the plastic injection molding industry. Given the new permanent nature of the federal tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving tax credit opportunities.

Request a free assessment to determine qualifying R&D tax credit eligibility.

Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with businesses that may qualify for R&D tax benefits. For more information, read our e-book: The Business Owner's Guide to R&D Tax Credits.

You may also reach us at 800-260-4138 or leave us a message below.


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