Research & Development
Tax Credit
Tax Credits to Promote Innovation
The R&D tax credit isn’t just for scientists in lab coats or cutting-edge tech companies—it’s for any business investing in the development or improvement of products or processes. Unfortunately, due to widespread misconceptions, fewer than one-third of eligible companies actually claim this valuable incentive.
Unlike a tax deduction, the R&D credit offers a dollar-for-dollar reduction in your tax liability—typically ranging from 9% to 14% of qualifying expenditures. In most cases, employee wages related to the performance, supervision, or direct support of R&D activities are the primary driver of the credit.
A company that has worked on improving or developing products or processes in recent years may be able to generate tax refunds for R&D credits not claimed in prior years.
Identifying and substantiating R&D tax credits requires a nuanced understanding of both the tax code and your business operations. At Taxster, we specialize in developing comprehensive R&D tax credit studies that are tailored to your organization’s technical, financial, and tax environment. Our process is built to withstand IRS scrutiny and ensure you receive the maximum benefit.
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We utilize the IRS-defined Four-Part Test to determine eligibility and guide each client through a seamless and defensible credit claim process.
Four-Part Test
TECHNOLOGICAL IN NATURE
Engineering or Scientific Principles
PERMITTED
PURPOSE
New or Improved Product, Process, Technique, Software
TECHNICAL UNCERTAINTY
Capability, Method,
or Design
PROCESS OF EXPERIMENTATION
Evaluation of Alternatives
How Our Projects Work
ASSESS | IDENTIFY | QUALIFY | REPORT | DEFEND
01 | Assess
We offer complimentary assessments of all R&D tax credit opportunities. We like to have an introductory call to understand what the qualified research activities might be and will request pieces of financial and tax information to perform our assessment. These items can include payroll reports, tax returns, contractor invoices, and employee organizational charts. Once we have estimated the benefit, we deliver the results along with our upfront, fixed pricing proposal.
02 | Identify
We work closely with the client’s subject matter experts to identify the change activities and associated expenses in a given tax year. We evaluate the expenses related to each change activity with our proprietary tools to ensure all possible qualified research expenses are accounted for.
03 | Qualify
We ensure that each change activity passes the 4-part test and isn’t subject to any other statutory or case law exclusions. We also evaluate contract language to ensure all the economic risk and intellectual property rights have been satisfied. Finally, we evaluate the qualified research expenses to ensure they are includible and not subject to any exclusions.
04 | Report
We develop a report that highlights each qualified research activity within your company, and the associated qualified research expenses for each activity. Our report incorporates contemporaneous documentation gathered from our client’s subject matter experts to further substantiate the credit claim.
05 | Defend
We stand behind our work 100%. In the unlikely event of an IRS or state department of revenue audit we will defend our tax credit claim at no additional expense to our clients. We proactively work to ensure the highest work quality for our clients.