Posted by Robert Bryant, Esq., CPA on 10.11.24
Research and development (R&D) tax credits can help companies in a wide variety of industries save tens of thousands of dollars for their qualified research activities. That’s why it’s surprising that fewer than 33% of companies that qualify for the tax credits actually apply. While many companies are simply unaware of the value the credits can offer, some don’t apply over the concern of having proper documentation of R&D activities in the event of an IRS or state audit.
Whether you are a CPA firm with qualifying clients or a business applying directly for tax credits, it is valuable to have the guidance of a professional firm that can offer full audit representation. Here are some best practices you should consider in seeking representation:
Transparent Client Document Retention
You want to hire an expert who can provide not only the final numbers, but all supporting documentation of your R&D activities. Through full transparency, your experts should be prepared to respond to any Information Document Request (IDR) that is presented by any federal or state agency. With a Tax Point Advisors R&D tax credit study, our clients own all of our work, including the study report that is needed for audit defense.
Industry-Leading Audit Representation
No one wants to be audited, but you should be prepared, especially when you’re applying for a multiple-year study that will require amended returns. While Tax Point Advisors’ audit rate is under five percent, we are always prepared to provide CPA firms and their clients with full federal and state R&D tax credit audit representation at no extra expense. In fact, we are the only firm that utilizes an IRS defense audit to review our studies before they are even completed.
Total Accountability
In the event that you are audited and asked to produce documentation, you should count on your R&D tax credit professionals to proactively take on all of the details so that you can go about the business of running your company. Depending on the complexity of your study, the audit process can continue for quite some time. From qualifying wages, qualifying supplies and contractor costs, your R&D tax credit expert should be prepared to walk the agent through the entire process with full disclosure.
With industry-leading audit success, our team of engineers, CPAs and tax attorneys provides strategic direction and, when needed, high-quality legal representation with the proven ability to back tax credit claims. These best practices are at the core of our industry-leading audit success rate to date.
Find Out if Your Activities Qualify
The R&D tax credit can be a lucrative incentive for innovative businesses. Given the new permanent nature of the tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving tax credit opportunities.
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, please contact (800) 260-4138 or please leave us a message below.
