Research & Development Tax Credits for Manufacturers

The IRS, and most states, have implemented numerous programs to stimulate business growth. Many such programs provide tax benefits in the form of deductions or credits. Any company participating in such programs can reduce their tax burden. These overall benefits can enable a business to utilize funds for other projects, more assets or training programs.

One such generous program is the Federal Research and Development (R&D) Credit. Since 1981, the Research & Development Tax Credit has been rewarding companies for developing new and improved products and processes. This is a permanent program that offers income tax credits, payroll tax credits and refund opportunities.

Even if your business doesn’t have employees wearing white lab coats, it might qualify for Research & Development Tax Credits that could equate to significant dollars to your bottom line. Most U.S. companies eligible for this benefit are manufacturing type entities.

Does your company’s employees or consultants perform any of the following activities below?

• Developing or improving production and/or manufacturing processes
• Developing, implementing, or upgrading systems and/or software
• Developing internal use software
• Automating and/or streamlining internal processes
• Implementing new procedures
• Designing tools, jigs, molds, and dies
• Developing new, improved, or more reliable products / processes / formulas
• Developing prototypes or models (including computer generated models)
• Performing certification testing
• Automating and/or streamlining internal processes
• R&D Costs to prepare to file for a patent are viable costs

If so, some of the expenses incurred related to these activities can be treated as dollar for dollar tax credits. Research & Development Credits are available for any business type and any size company.

In order to help you understand the benefits, Synergy, along with Marcum LLP,  a national accounting and advisory firm, are offering to discuss your company’s processes to determine if it is a candidate for current or prior year credits. Those businesses eligible for credits in past years who did not originally take advantage of this opportunity, may be able to amend prior years’ tax returns and apply for a refund. Many states also have similar programs.

With proper planning and documentation, manufacturers can utilize the potential tax savings related to Federal and State tax credit and incentive programs to acquire needed assets, implement ERP and commence training programs!

To learn more about the tax credit specifics, we encourage you to contact us. If you would like to explore this opportunity further reach out to Diane Giordano directly at diane.giordano@marcumllp.com or call 631-414-4532.

About the Author:

Diane Giordano is a Tax & Business Services Partner in the Firm’s Melville office and is the Firm-wide Credit and Incentive Program Industry Leader. She works closely with large, multi-state companies as well as family-owned businesses, providing tax consulting, financial statement disclosure and compliance services. Ms. Giordano’s clients also include SEC reporting entities for which she provides ASC 740 services.

Ms. Giordano has more than 25 years of accounting and tax experience. She frequently speaks to professional and industry organizations on a variety of tax topics and has authored numerous articles that have been published in various professional publications. Additionally, she serves as the editor of the Firm’s tax newsletter, Beyond the Numbers and the annual Marcum Year-end Tax Guide; and also is the Firm-wide tax training coordinator.

Prior to joining Marcum in 2005, Ms. Giordano spent 11 years at a global accounting organization and, previously, six years at a “Big 4” firm. Earlier in her career, she was an internal auditor at a large regional bank.