Article
Three key attributes to look for in an R&D tax credit provider
July 19, 2020 · Updated Sept. 7, 2023 · Authored by Travis Riley
The R&D tax credit can be a significant money-saving opportunity for companies that engage in qualifying activities; and over the past 10–15 years, new regulations, court rulings, and guidance from the IRS and state tax authorities have provided greater clarity on positions companies can take to increase the credit’s benefits.
In response to this uptick in R&D credit interest and availability, an increasing number of CPA firms and isolated service providers are advertising R&D tax credits, making it more difficult for companies to discern the differences in the services offered by each provider, which can vary significantly. To help select the right provider, there are three key attributes to consider:
Experience
Engaging tax accountants who specialize in the R&D tax credit — and understand the ramifications of the tax laws and regulations that surround it — is essential to successfully claiming the credit. Some firms handle the R&D tax credit as a subset of the tax return preparation, but they might not have the depth of knowledge to properly address complex issues associated with R&D tax credits or, given their limited bandwidth, they could potentially overlook risk areas that could impact the sustainability of the credits.
Therefore, it is important to consider the following factors when evaluating a firm:
- Whether they have dedicated R&D tax credit service team
- The size of the team, which can be an indicator of whether a firm is an established practice
- The overall experience level of the provider
- Diversity in skillset
There are several factors that determine whether a provider can help a business recognize a credit. For example, the organization of a company and its related parties can impact the computation of a credit. Furthermore, depending on the company’s industry, there are different types of activities performed that could impact the qualification and quantification process. A provider should possess the technical tax knowledge and experience to help determine how the business structure and the related activities could impact the company’s R&D tax credits.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.