Posted by Jeffrey Feingold on 06.14.18
While many CPA firms are aware of the tax-savings potential offered by research and development (R&D) tax credits, not every firm has the time, resources or expertise to take on the application and documentation process, as well as help clients account for R&D tax credits. Now that Congress has enhanced this federal tax credit and made it permanent, more of your clients than ever may qualify.
The activities your clients conduct on a regular basis may qualify for valuable research and R&D tax credits. These tax credits represent a significant financial advantage to businesses in a wide range of industries, reducing tax liability and allocating cash back for reinvestment or other needs.
While more than 14,000 U.S. companies claim federal R&D credits annually, less than 33% of companies that qualify for the credits actually apply for them.
CPA firms and their clients often need outside expertise when it comes to specialized tax services. Yet it can be time-intensive to perform the R&D tax calculations necessary to determine eligibility.
Choosing an R&D tax partner that can work seamlessly with your firm can offer great value to both your firm and your clients. Here are seven important qualities to keep in mind when choosing the right R&D expert. For example, the CPAs, engineers and tax attorneys on the Tax Point Advisors team have over to 50 years of combined R&D credit expertise, as well as experience in a wide range of industries.
1.) Qualified Team
To capture the maximum number of federal and state R&D tax credits for your clients, you want to make sure you are working with R&D experts who have comprehensive expertise in the field. In additional to a long record of successful R&D credit results, look for a good mix of strong CPA expertise and deep industry knowledge—especially in those industries ripe with R&D activities like manufacturing and technology. For example, the CPAs on the Tax Point Advisors team have up to 30 years of R&D credit expertise, as well as experience in a wide range of industries.
2.) National Presence
Make certain your R&D tax credit experts can represent your clients wherever they conduct R&D activities. Look for an R&D partner that has the bandwidth to know your clients’ markets and the accessibility to make all visits necessary. Our senior project teams are on the ground in our offices across the U.S., so travel is generally made by local staff.
3.) Multiple Client Site Visits
One visit to a client from a headquarters office will not yield the same results as meeting with your clients throughout the qualifying process. Tax Point Advisors makes multiple client site visits for each R&D study – large or small – always by experienced R&D professionals. The first visit is part of the pre-engagement process; it qualifies the activity or activities that meet IRS requirements, and provides the client with a highly accurate credit range.
The next few visits are part of the study process, in which we perform a detailed analysis and document technical issues. These in-person visits allow us to better understand the clients’ processes, and lead to stronger study reports and more accurate credit numbers.
4.) Fixed-Fee Pricing
Our pricing is done on a fixed-fee basis. Because our fee is fixed, the IRS knows we have no financial incentive to find your client a bigger credit than our original estimate. While we often do find bigger credits, we receive no additional compensation.
5.) No Out-of-Pocket Costs
The last thing you want to worry about is extra fees from your R&D credit partner. Make sure the tax credit professionals you are considering are transparent about any additional costs.
Tax Point Advisors never charges clients for out-of-pocket costs, such as travel expenses. In the event that we do need to fly in a specific Tax Point Advisors team member for a special project, we still don’t charge the client for our travel expenses. Tax Point Advisors will, of course, respond to any Information Document Request (IDR) that is presented to a client by any federal or state agency and provide full audit representation to our clients for no additional charge.
6.) High Audit Success Rate
No one wants to think about an IRS audit, but it is always a good idea to be prepared. However, if an audit is necessary, it is essential that a business is able to provide documentation that backs up its R&D activity and eligibility. It is essential that you partner with an R&D tax credit expert that has a successful track record for defending audits.
Tax Point Advisors has the industry’s leading audit success rate. We don’t just calculate R&D credits—we have experts placed nationally so that we can also conduct a local, thorough on-site R&D review process for every study, and then write a bullet-proof, audit-defensible study report.
7.) Clients Owns the Work
In a Tax Point Advisors R&D study, the client owns all of our work. This means that the study report is useless under audit unless that client retains us for audit defense. With our studies, we provide not just the final numbers, but ALL of the work that got us to there, allowing full transparency, and giving the client control and ownership of all of the data.
By keeping these seven qualities in mind, you will be better equipped to successfully partner with an R&D tax credit expert that will offer value to both your firm and your qualifying clients’ businesses.
Remember, many of the activities your clients already perform on a daily basis qualify for R&D credits, and if you don’t offer this attractive tax credit to your clients, someone else likely will. R&D tax credits present an outstanding opportunity to offer your clients a value-added service. By partnering with an R&D expert, you can offer the service without burdening your staff with time-intensive documentation.
Tax Point Advisors assists CPAs and their clients in identifying and capturing their maximum federal R&D tax credits, as well as state R&D tax credits. For more information, contact us at (800) 260-4138, or leave us a message below.