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2014 R&D 100 Awards

Last month R&D magazine announced the winners of the 52nd annual R&D 100 awards.

The awards recognize an international competition of 100 most technologically significant advances and / or products introduced into the market over the past year.

The R&D 100 recognize excellence across a wide range of industries, including telecommunications, optics, high-energy physics, materials science, chemistry and biotechnology. Some winners are established Fortune 500 companies and others are federally funded research institutions, academia and government labs.

Winners included; The Dow Chemical Company who created the NEPTUNE subsea insulation system and NinePoint Medical who developed the NinePoint Medical NvisionVLE imaging System. To see the full list of winners click here.

Big or small, every company can reap the rewards (and awards) of investing in research and development.

Everyday Swanson Reed assists companies claim for R&D Tax claims to help companies stay innovative and ahead of the curve.

For more information, contact one of our advisers.

R&D Case Law: Learning From Legal Battles

Occasionally, often in the most extreme circumstances, research and development tax credit audit appeals can end up in court. The cases are filed with the US tax court, and it is up to the court to decipher and clarify the rules and regulations for the R&D credit. The rulings are then applied to the way companies and the IRS handle the tax credit. These changes are why it’s essential to stay up to date with the latest issues and verdicts within R&D case law. Only then is it possible to create stronger claims in order to increase the savings you’re able to achieve through the use of R&D tax credits.

A Recent Significant Issue

In September 2013, the US chemical firm, Dow, failed to win a legal battle over its claims for R&D tax credits. The US appeal court decided that the money the company was hoping to recoup included indirect research costs, and this should be a cautionary tale for all companies that put a lot of money into R&D.

The three judges made it clear that tax credits are only to be used for the cost that the taxpayer pays out for qualified research which would not arise in any other circumstances. In the Dow case, the claim was being made for supplies used for research that would already have been purchased so they could be used in the finished product.

Click here to access our full database of R&D tax credit case law.

Supporting Your Claim

At Swanson Reed, we come ready with the expertise and experience to assist any company with their R&D audit. Should you be faced with an audit, our chartered accountants will help you through the entire process. Initially, we can help to ensure that you have a complete and accurate claim; we have an audit checklist available which you can use to eliminate any uncertainty with your R&D claim. The checklist is designed to ensure that you have all the information and documents required that would give evidence and support for the R&D tax credit. If your claim is audited, we won’t leave you to face it alone.

Our experts will make the entire process as straightforward as we possibly can. We will work with your accounts and examine your documentation and claims to ensure that we’re able to establish a firm argument that will support your claim and have a positive outcome. Our specialist R&D tax advisors are on hand to explain the terminology and the process involved. We have an excellent record of defending our clients across a variety of industries.

Need Assistance With Your R&D?

Contact us today if you need assistance making your claim or if you need help preparing for an upcoming audit. We’re on hand to provide you with up-to-date information and can guide you through the motions of your claim or audit with minimal disruption to your business. We have the expertise, we provide complete confidentiality at all times, and we provide only the highest-quality service.

R&D Tax Credit : Oil and Gas Industry

Initially, the R&D tax credit was primarily used for technological and biomedical research when it was introduced by congress over thirty years ago. Since its first introduction the tax credit has evolved, now it encompasses multiple industries including the oil and gas industry.

The R&D tax credit can be used to revolutionize the oil and gas industry. Both of these commodities are widely used throughout the world. They are used in our homes, our vehicles and in businesses. In order to continue developing the gas and oil industry innovation is required, which is where the R&D tax is proving to be essential in Texas and the rest of the United States.

Innovation Requires Time, Money and Resources

Further developments in the oil and gas industry are required in order to remain competitive in today’s markets. However, substantial research and development is needed, which can be costly. Thankfully the R&D tax credit is available for eligible companies, offering a lucrative investment that allows for forward thinking and the next steps in innovation within the oil and gas industry.

Technology for the gas and oil industry is one of the most complex, therefore it’s only fitting that the tax credit is now available to ensure the research and development is able to continue to grow. This is an industry that is vital to the American economy as oil and gas are used everyday around the world.

Qualifying for the R&D Tax Credit

There are certain activities that determine whether companies and organizations in this industry are eligible for the credit. Here is a short list to give you an idea of what activities are included:

Offshore structure design
Helidecks
Development and testing in a variety of areas including shutdown services, plug and abandonment solutions and turnaround
Plant design regarding safety, chemicals, pollution control and pressurization
Wastewater solutions
Designing and improving drilling
Combustion testing
Improvements in drilling processes and design
Testing and development including:
- Plug and abandonment solutions
- Shutdown services
- Turnaround

The tax credit is there for you to use, the government wants you to use it so now is the time to take advantage and make it work for your business. Many businesses are missing out on this essential tax credit because they feel they don’t qualify, or that they simply don’t have the time or the resources to handle the application. We’re here to help. We will happily conduct a feasibility study, at no cost, to find out if you could benefit from the credit. Make the most of this opportunity to invest in your research and development and watch your business continue to grow and evolve.

Making the Most of the Incentives from the Treasury Department

Back in September 2013, the Treasury Department proposed some new rules that would expand the reach of the R&D tax credit incentive. Thanks to the new rules, more business activities are now eligible for the research and development tax breaks that have been so beneficial to businesses all over the country. The U.S. government has now included a variety of manufacturing process oriented costs, which has been seen as a positive result, especially for those working within manufacturing and food processing.

New Opportunities for Business Owners

Thanks to the new rules, businesses are now able to recover the cost of producing prototypes, even if the prototype is later sold. Testing new manufacturing processes is also included, so there’s nothing stopping you from developing new systems that could improve the way your business operates, simplify the production and manufacturing processes and benefit industry and consumers.

Reducing the Risk of Conflict

The Treasury Department has worked hard to reduce areas of confusion in the R&D tax credit incentive. The confusion has often led to problems and conflicts between companies and the IRS. As a result, many small to medium sized businesses, as well as large corporations, have often neglected the tax incentive for fear of being audited or being involved in legal issues. Therefore, the new rules have been met with a positive response from the tax payers. With the areas of dispute eliminated, it’s now easier than ever to put in a claim for any eligible projects and activities in businesses.

Removing the Grey Areas

Now the murky waters have cleared there’s nothing stopping all eligible businesses from putting in their claim for R&D tax credits. However, it is essential that you fully understand what is required from you and what is considered to be eligible. We’re able to assist you with these activities. Our tax specialists are ready to discuss your research and development activities and help you to identify the different expenses that you could claim for.

With our expertise, we can explain the R&D tax credit incentive to you regardless of the industry you’re in. We will explain the current rules created by the Treasury Department and guide you through your planning and claim process. With our help you can benefit from this essential tax incentive that could drive your business further, create expansion opportunities, create new jobs and even change the way the industry works.

Advancing US Progress in Science and Technology

There was a time when the US was the leader in practically any field you care to consider, from automotive to pharmaceuticals, from medical science to computer technology. While we still retain a noticeable lead in many of these fields, the rest the world is quickly catching up. As a result, companies across the US are motivated to constantly invest in research and development, in an effort to come up with better processes, new products, new patents and innovative solutions. Fortunately, the US government, at the risk of negatively impacting the US Treasury, has had the perspicacity to incentivize this type of research, by providing what is known as the Research and Development Tax Credit. Today, more than ever, it is a critical component of any company’s balance sheet and yet its full benefits are often overlooked.

The Qualified Costs

Many companies don’t fully appreciate how many of their ongoing activities actually can qualify for this tax credit. There are three basic cost areas which qualify for the credit:

Wages and Salaries. Anyone involved in any type of research capacity, whether it be to perfect a new prototype, do research for a new patent, or even improve an existing process can be considered a viable candidate. The salaries not only of the specialized researchers themselves, but also anyone in a supervisory capacity or support role can be considered for this credit.
Supplies. Any materials or supplies that are consumed during any type of R&D activity are also considered to be quantifiable for this tax credit.
Outside contractors. The expense of hiring experts to help assist or consult during any type of R&D activity is also considered to be subject to this credit.

To qualify for this credit, a company must be involved in either inventing a new product, or improving on an existing one, or alternatively, improving the processes involved in existing manufacturing procedures. One additional benchmark to qualify for the federal R&D tax credit is that the company must have a payroll of at least $1 million annually, and if it is not profitable at present, they must be able to prove they expect to be so soon.

The Illinois Research and Development Tax Credit

The State of Illinois’ Research and Development Tax Credit uses the federal guidelines as the basis for determining eligibility for the state tax credit. For Illinois, the tax credit rate is 6.5% and it is nonrefundable. Any company that wants to apply for this credit needs to compute their average R&D expenditures for the past three years, which thus establishes the base amount which the company will use to formulate their credit. With such a simple system in place, many small and medium businesses are beginning to take advantage of this incentive to increase their competitive advantage. Over the last few years, the top 10 credit recipients continue to be the recipients of the bulk of these credits. However, the state has seen a market increase in credits for smaller businesses, as they begin to fully understand the beneficial impact of the state tax credit, as well as the federal tax credit and continue to invest in innovative solutions in their market niche.

Forecast Good when it Comes to R&D Spending in the United States

While the past few years have not been particularly positive when it came to R&D spending by businesses in the US, the outlook for 2014 and beyond looks brighter indeed. According to the National Science Foundation, the overall spending when it comes to research & development in the country should increase this year and in the near future.

In the report introduced by the NSF in December of 2013, it was shown that there was an improvement of 5% in overall R&D spending as of 2011, which then amounted to a total of 428 billion dollars. As of 2012, the number rose to 5.7 percent, amounting to a total of 452 billion dollars. The report shows a vast improvement from the years 2009 as well as 2010, when the research & development activities of different companies were at an all time low.

There can be many reasons attributed to this rise in R&D spending by companies in the US, and we can speculate that one of these reasons is the revamping of the R&D regulations and incentives. States like Texas have recently reinstated their R&D tax credits and incentives, therefore encouraging companies based in or operating within the state to increase their R&D activities. These kinds of changes have all added up to a more robust forecast for R&D activities in the coming years.

Where the US stands globally

The US government understands the importance of R&D activities as a drive for growth and innovation. With an improvement in the country’s R&D activities, both in the public and private sector, the US can remain competitive on the world stage. In fact, the US federal government is expected to set aside approximately 123 billion dollars for R&D funding this year alone. This is a 1.5% increase from previous years, which indeed bodes well for many companies already engaged in R&D activities or those planning to immerse their enterprises in R&D. All in all, the US still remains the largest R&D investor in the world today.

How your enterprise can benefit

It has long been known that the pharmaceutical industry has always been a big player in research & development in the US. But other companies from different industries can also benefit from the government’s R&D incentives, as long as they have been proven to incur expenses which are related to qualified research & development activities.

Each state also has its own form of R&D incentive, so companies operating in or based within a particular state would need to know what these credits and incentives are. Although there may be some kind of ‘gray area’ as to what qualifies as R&D spending (for instance, what the difference is between a prototype and a production model, or what constitutes an experimental process), the changes set forth by the government should make these ‘gray areas’ clearer. This is to avoid any disputes in the future.

Some companies which are now engaged in a dispute with the government regarding their R&D claims often become confused because of uncertainty regarding documentation and cost deduction. However, companies can avoid this confusion (and any resulting case or dispute) by making it a point to confer with expert R&D tax specialists before they begin with their R&D plans and activities. If you would like to benefit from the government’s revamped R&D tax credit and incentives, contact the specialists at Swanson Reed today.

What You Need to Know about R&D Tax Credits and Incentives and the IRS

Recently, there have been particular changes to the research & development tax credit and incentive system in the United States. Some states, like Texas, which did not have a proper R&D incentive program, have recently begun offering this once again, and there have been other changes brought about by the government to the R&D tax credit and incentive system that strive to make the process and documentation clearer and easier to understand than ever before.

But there is one misconception about R&D tax credit and incentives which has hampered many companies from taking advantage of this program: the misconception that claiming tax relief is difficult, especially when it comes to dealing with the IRS.

While it may be true in some cases that the IRS has rejected a company’s R&D tax credit and incentive claims, there may be varied reasons for this. But a company wanting to engage in R&D activities need not be daunted by the role of the IRS if they know that they have properly qualified according to the terms set by the government and their respective state.

R&D tax credits and tax planning: what is the relationship?

Research & development tax credits and incentives is a program developed by the government to support enterprises which aim to expand and improve their products and services through research & development activities. If a company can prove that it has incurred expenses which fall under qualified research, then it may claim R&D tax credits and incentives.

While some corporations may be involved in aggressive planning for their taxes in order to circumvent their tax responsibilities, a majority of corporations are not engaged in this type of tax maneuver at all. Tax planning which may be considered aggressive is when a company tries to look for a good tax position which may include certain strategies such as setting up accounts offshore and looking for tax shelters. But the good news is – the aggressive planning of taxes is not even related to what you can claim from your research & development activities.

While the regulations of the IRS may not always be at par with a company’s own, sometimes making it difficult for a company to claim tax credit and incentives, companies can always seek assistance from professional R&D tax specialists which can guide them through the entire process and make sure that they can effectively claim R&D credits without being rejected by the IRS and without having to develop aggressive tax strategies.

Why it pays to take advantage of the government’s research & development tax credits

For any company, big or small, start-up or long-established, it always pays to know how you can benefit from R&D credits. Why? Because it can help your enterprise grow and expand as well as keep up with an increasingly competitive world. With R&D tax credits, you can benefit from tax relief which allows your enterprise to save thousands every year.

With expert help, you can easily learn how your company can qualify for R&D tax credits in the US. The R&D tax credit specialists at Swanson Reed have years of experience under their belt – talk to them today and find out how your company can benefit from this program.

Why The Government Needs to Get That R&D Tax Credit Renewed

Companies in Ohio may find themselves stuck in a financially difficult position shortly as there is no sign of the government completing the expected renewal of the tax credits as of yet. This is deeply frustrating for those Ohio companies who seek to offset some of their research and development costs.

A Matter of Time:

Whilst it is fully expected that the Treasury will again extend the availability of the tax credits as it has done every time the incentive has expired, there is no confirmation of when this might actually take place as of yet. This does have an effect on the accounting of companies in Ohio and around the US as a whole which may return figures that they were not expecting to. This poses companies with a large challenge when it comes to financial forecasts. The reduction in tax rates that eligible companies receive can account for a good percentage of their tax bill.

Understand the Effects:

It is important that Ohio based companies understand the impact that this could potentially have on their finances and be in a position to claim the tax credits as soon as they are renewed. Advice should be sought from experienced assessors who can give businesses the benefit of their knowledge. The best approach to taxation is always to keep it simple and concise. A good team of professionals such as those at Swanson Read will be able to guide you through the legislation and eligibility requirements allowing you to understand what is available to you and therefore the financial position of your business. This will allow you to plan better for your future.

Plans To Make It Permanent:

It has been suggested, by more than one President, that the R&D tax credits should be made into a permanent fixture by the Treasury. It has after all expired nine times so far in its thirty plus year existence and it has been renewed every time. However, the costs of making it permanent seem to be so high that the government is avoiding this option, preferring instead to keep to the renewal system that keeps businesses in the dark about their finances for long periods of time.

It is hard for any company to function when it is unsure of where it stands financially. It can affect all areas of its operations in the long term. Having the support of taxation professionals to provide the right advice at the right time is a must for any forward thinking company.

The Government and R&D Tax Credit – and How You Can Benefit

The government’s role when it comes to research & development tax credit has always been clear-cut. Without certain government policies, the tax relief brought about by claiming R&D tax credit would not even be available today. The US government is keen to promote innovation and development in the country, and one way of doing this is by encouraging companies to engage in more research & development activities by giving them tax credits and incentives.

The latest news from the government regarding R&D tax credit

One proof of the government’s commitment to promoting R&D in the US is the recent Senate Finance Committee’s passing of the legislation which extends certain tax provisions, one of which is the research & development tax credit. This legislation extends through 2015, and would be retroactively effective until the start of 2014 so that there would be no gaps when it comes to the claiming of benefits.

And there’s more good news, especially for small and medium-sized enterprises: in addition, the Senate Finance Committee has accepted an amendment which allows small and medium-sized businesses to claim research & development tax credit against Alternative Minimum Tax for the years 2014 as well as 2015. This amendment also lets start-up companies claim research & development tax credit for the very first time and gives them the opportunity to take as much as 250,000 dollars of research & development tax credits against their yearly payroll tax. To qualify for this special Start-Up Innovation credit, an enterprise should be operating for less than five years and have fewer than five million dollars in its gross receipts.

How your company can benefit from the government’s R&D tax credit

Today, more and more enterprises are beginning to take advantage of the government’s R&D tax credit. And while it may be difficult to understand how you can qualify at the beginning, a little bit of knowledge and research goes a long way. If you feel that you already have an existing activity that can qualify as research & development, then you can find this out for sure by ascertaining four criteria: whether your R&D activities are done for a purpose which is permitted, whether it is done in order to eliminate uncertainty, whether it undergoes a particular process of experimentation, and whether it is inherently technological (based on the hard sciences, and not the soft sciences). Once you have passed these set criteria, then it is easier for you to begin the process of claiming R&D tax credit for your enterprise.

The important aspect to remember is that claiming R&D tax credit from the government becomes easier if you break it down into different, smaller components. But you need to assess the above-mentioned criteria first, and make sure that your enterprise falls under all of those. Keep in mind as well that there are other R&D activities which may not qualify, such as research that is done after a product or service has already been commercially launched, or research done in order to duplicate an existing component of the business, among others.

The best way to determine your qualification for research & development tax credit is to consult with a professional R&D tax specialist. Swanson Reed is comprised of an expert team of tax specialists who are more than willing to help you ascertain your R&D tax credit qualification. Speak with a representative today to find out how your company can take full advantage of the government’s R&D tax credit program.

What to Expect when Settling a Claim for R&D Tax Incentives in Ohio

The United States has long been known for its somewhat rigid rules when it comes to corporate taxes. Companies usually have to resign themselves to a high rate of corporate income tax. But recent developments have shown the US government’s aim to move forward – and earn points with various firms and corporations, big and small.

The proposal put forward by the US Treasury department involves research and development tax incentives, which aim to clarify the rules for the program and therefore make them more ‘attainable’ for more firms. Some tax lawyers and specialists have already lauded these proposals, stating that they can allow more companies to save millions in their taxes, as there are undoubtedly less rigid restrictions on R&D tax credits.

The four-part R&D tax incentive test

In order for any firm to qualify for the R&D tax credit, they need to determine their eligibility by making sure that they adhere to the four set elements. These include:

The research’s purpose should be to either improve a current functionality or improve an existing product so that a technological and social gain can be attained.
The research project or program should follow a certain, systematized process and procedure, where several different alternatives for other developmental projects are assessed and screened.
The firm or taxpayer should have the goal of eliminating any uncertainty related to the specific research and development program.
The research project must be related to engineering, physical science, computer science, or the biological sector.

Apart from these four conditions, there are a host of restrictions which include software which has been developed for the company’s own internal use, reverse engineering, or other research activities that are related only to the social sciences.

A look at Ohio’s R&D tax incentives

Ohio is known for its Ohio Research and Development Investment Tax Credit, which is basically a non-refundable credit from the CAT, or Commercial Activity Tax in the state. Firms which are interested in qualifying for this incentive are supposed to invest in qualified research expenses, according to Sec.41 of the IRC. This would also include expenses incurred in-house, such as supplies, employee salaries, and contract expenses. This Ohio R&D tax credit is equal to 7% of the total amount of qualified expenses on research in excess of the firm’s average investment in R&D over the three previous years. If there is any excess credit that has not been used for the year when it is earned, it is possible to have it carried over for a period of 7 years.

Ohio also has its Research and Development Sales Tax Exemption, which exempts any enterprise from their whole state and county sales tax when they purchase qualified equipment and machinery that will be primarily used for R&D.

If you are a firm based in Ohio and would like to know more about your privileges for the R&D tax incentive in the state, contact our experts here at Swanson Reed.