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US Research Credit is Now Permanent

Bill passage allows for Research Credit to become Permanent

After passage by the Senate on Friday, December 18th, the President signed into law both a new federal budget, as well as a second bill providing for the extension of a long list of expiring tax provisions. The largest of these was the Section 41 Research Credit, which has now been made permanent. In addition, the credit will now be available to off-set the Alternative Minimum Tax, and for some small business, may be used to offset payroll taxes as well. Watch this space for more information soon. Meanwhile, if you are interested in pursuing a research credit claim, please call us today!

Join us for the 2018 GBMP Annual Northeast LEAN Conference!

2018 LEAN Conference BadgeJoin us for the 2018 GBMP Annual Northeast LEAN Conference. This year’s conference will be held Wednesday and Thursday October 10th and 11th at the RI Convention Center in Providence, RI.

The Northeast LEAN Conference was created by the non-profit Greater Boston Manufacturing Partnership (GBMP) to provide services, information and inspiration to Lean practitioners – from those just starting out to seasoned Lean leaders from the manufacturing, healthcare and other industries. The practical learning format features exceptional keynote and breakout presentations, expert panels, peer-to-peer discussions, hands-on simulations, interactive learning and sharing, and great networking opportunities.

Tax Credit Advisors is hosting a booth at the conference to answer any questions you may have about funding for your technical development and how you can earn money while improving your process, product and equipment technologies. We will also have regular presentations at our booth during both days. Each full day at the LEAN Conference features numerous attractions, ensuring there’s something for everyone. It would be great to see you there!

Where is it?

The Rhode Island Convention Center
1 Sabin Street, Providence, RI 02903

Looking to attend? Click here for more information on how to register.

Countryside

Can Farmers Take Advantage of R&D Tax Credits?

Farms and farmers often feel the squeeze when it comes to cost. Farmers are some of the hardest working Americans who often get left out when tax bills are changed or amended. Many farmers are receiving smaller farm bills, and funds are constrained. Is there any reprieve for farmers in research and development (R&D) tax credits?

The answer is unequivocally yes. Many farmers and farm owners who are experimenting with new methods and processes fail to claim the research and development tax credits for which they may be eligible. Whether they are uninformed about R&D tax credits or think they do not qualify, it’s important to understand that with diminishing profits from farms and agriculture, now more than even farmers and farm owners need to take advantage of R&D tax credits.

Farm Pickup Truck

No matter how big or small your agricultural business may be, experimental development of farming methods, equipment and growing methods can qualify for tax credit support. The important thing is that you must be attempting to expand the technological base through experimentation. With claimed tax credits, farmers can expand their business, buy newer or more equipment, pay for more help, and really stretch their dollars.

The problem is when people read “research and development”, the first thing that comes to mind is big pharmaceutical companies and scientific divisions that work in labs researching day in and day out. We cannot stress enough that the definition of research and development is far broader than just people in lab coats. Research and development can stretch to many different areas of innovation, such as experimental development of new methods, processes or equipment. For example, a dairy farmer may try to develop an improved milking methodology or cooling process for their dairy products. Expenditures for labor, materials consumed and contract engineering could qualify for research and development tax credits. It is important to note, however, that “off-the-shelf” purchases and capital equipment are not qualified under the US federal Research Credit. These benefits are all about experimental development of new or improved products, processes and equipment.

Sheep

Research and development tax credits are specifically put into place to reward businesses who spend dollars to expand the field of technology by experimental means inside of the US rather than outsourcing that development activity. Business owners are urged to claim these R&D tax credits to help grow their company and to keep technologically based jobs here in the US.

Let us help you and your farming operation take advantage of research and development tax credits. Don’t leave money lying on the table. Contact Tax Credit Advisors today.

Money Heap

Upcoming Seminar: Federal & State R&D Credits 6/4

FEDERAL & STATE R & D CREDITS is a ½ day seminar (4 credits) led by Otto Kunz, CPA, EA, MBA, and founder of Tax Credit Advisors, LLC. Topics include the significant changes to the Federal R&D program enacted into law in December, 2015 and earlier in the year. An important 2016 change to the MA state credit also will be presented. The Federal changes include making the credit a permanent part of the tax code, a permanent offset to alternative minimum tax for certain taxpayers, and enactment of a brand new payroll tax offset for certain taxpayers. The qualification requirements for these new provisions will be discussed, as well the mechanics of applying them to taxpayers’ returns. Dozens of industries which previously did not qualify for R&D credits can now file for these tax benefits, and this seminar pays special attention to small and mid-size companies across a wide range of qualifying industries, examining how and why these companies now can qualify, as well as the credit calculation, typical credit results, the R&D tax credit study process, and also the most current audit issues and areas of IRS focus in R&D examinations.

The federal and state R&D credits seminar takes place on June 4th from 1:30 PM to 5:00 PM at the Hyatt House at 54 4th Ave in Waltham, MA 02451.

Tickets for this seminar are $175 and can be purchased through Boston Tax Institute by filling out the registration form and mailing a check. More information, including the registration form, can be found on their website by clicking here.

Fairy Tale

When Fairy Tales and Tax Law Collide

Once upon a time, manufacturing companies in the US got a tax deduction for exporting their manufactured goods to other countries. This was good because wages in America are high compared to other countries. The WTO (World Trade Organization) decided that this policy wasn’t fair to manufacturers in other countries, and so the rules were changed. The new rules allowed for a deduction of (generally) 9% of the value of all goods manufactured in the US against income tax. This was deemed fair by the WTO because both domestic and foreign manufacturers were treated equally and because it allowed the deduction for foreign companies investing in US jobs, plants and equipment.

The new tax bill has eliminated that section and replaced it with a new law: Section 199A. This highly complex law replaces the relatively simple Qualified Production calculation with a much more intricate set of rules. In essence, it amounts to this:

1) Corporations will now be taxed at 21% rather than 35% on taxable income.

2) Pass-through entities like S-Corporations, LLCs, sole proprietorships and others will be able to take up to a 20% deduction from their pass-through income, subject to certain limitations.

The plain language of the law seems to indicate that most service providers will not qualify for the deduction, and that most manufacturers will qualify. A close reading of the text of the law seems to indicate that some service providers may also qualify. However, it remains to be seen whether the regulations that are soon to be issued by the Treasury will support that interpretation.

It remains to be seen whether the big bad wolf will prevail.

As always, we stand ready, willing and able to help you navigate the ever-changing rules and regulations. Our mission is to help keep engineering and manufacturing jobs here, and to help bring distant jobs back! Call us today!

Section 41 Research Credit Preserved in New 2017 “TCJA” Tax Overhaul Bill

A special message from our founder

Highlights:

  • The Section 41 Research Credit is Preserved
  • Manufacturers, Software Houses and Others are Eligible
  • The Federal Credit Fosters Economic Growth Under TCJA
  • Both Corporations and Pass-Through Entities Benefit from TCJA

Otto Kunz

We have fielded many questions lately about the effect of the new tax legislation, which until recently was called the “Tax Cuts and Jobs Act of 2017”, or “TCJA”. The good news for manufacturers, software companies and other eligible companies is that the Section 41 Research Credit has been preserved, and even strengthened for some taxpayers. Here is some information we hope you find helpful regarding TCJA:

Because of Senate rules relating to the naming of bills, the new law is formally titled: “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”. It may be commonly referred to as the Tax Cuts and Jobs Act or even shorter as the TCJA, so this will likely be a useful search term for more in depth information in regards to it. However, for your own personal research, it may be useful to know the full title of the bill as described above.

Our primary focus here is the federal tax credit for research and development. The program was originally codified in the Internal Revenue Code as Section 44F in 1981 and re-numbered in 1986 as Section 41 as the “Investment Tax Credit for Increasing Research Activities”. It is widely referred to as the “Research Credit”. This popular provision continues to enjoy broad bipartisan support as a cost-effective and forward-thinking way to encourage companies to invest in experimental research and development activities here in the United States. Over more than three decades, the incentives provided under this important program have been shown to lead to increased investment in new and improved technologies.

In turn, many of the companies making those investments have proven to be better able to survive economic downturns and to prosper more robustly during more favorable conditions, ultimately leading to increased profitability and to increased overall tax revenues for the federal government as a result. Over time, the program has largely paid for itself in purely budgetary terms, and has created spin-off benefits in terms of increased employment and related purchases here at home, both by the companies claiming the credit and the employees added to do the needed work.

While many popular tax provisions have been eliminated by TCJA, the new law leaves this important incentive program in place. The most recent changes have broadened the availability of the credit in two important ways. First, small companies and their owners have been allowed to count the credit against the Alternative Minimum Tax (AMT). The new law repeals the corporate AMT, so larger companies will now benefit as well. Second, start-up companies and those with low levels of sales may qualify to claim the credit against employment taxes rather than profits. This provision, which has been in place for a few years now, is also preserved. It allows even unprofitable companies to gain at least some benefit as they continue to develop their technological capabilities.

Many people mistakenly believe that the Research Credit applies only to the invention of new products. While this important element of technological development is certainly qualified, the regulations extend to a far broader range of activities than one might think. For example, improved manufacturing processes also qualify, as long as the development efforts were undertaken in an experimental approach and were intended to overcome technological uncertainty regarding a trade or business of the taxpayer.  Scrap reduction efforts, improved unit cost projects and enhanced worker safety efforts are a few examples of this kind of project. In a similar way, development of improved equipment, tooling, jigs and fixtures can also qualify, as long as the activities were undertaken with a sincere and documented effort to overcome technological uncertainty by means of experimentation. This can also be extended to lean manufacturing efforts in some cases, as long as the efforts undertaken were truly experimental in nature.

The new law provides special benefits to owners of pass-through entities, like S-corporations, partnerships and LLCs. Lower tax rates are available to these owners, and the full amount of the Research Credit remains available to offset the net tax due for the owners of these entities, at least for the next few years.

Summary:

  • Projects eligible for the federal Research Credit include experimental development of
    • new and improved products;
    • new and enhanced manufacturing processes; and
    • related equipment, tooling and fixtures.
  • Many states offer companion credits, but:
    • these are only available for expenses subject to taxation in that state; and
    • are only available up to a portion of the state income tax liability in many cases.

Many state research credit programs mirror or significantly overlap federal rules.

The goal of all of these programs is to help companies to keep engineering and manufacturing jobs here in the United States. Our mission here at TCA is to help as many companies as possible to maintain technological development operations here at home, increasing our national employment base and improving the earning power of our companies and their employees.

Thank you for visiting our site! As always, we are very happy to help with any questions you may have or to clarify any issues you would find helpful! Just call us at 508-842-3232 or send an email directly to me at ottokunz@taxcreditadvisors.com . We look forward to working with you, and to making these important incentives as widely available as possible in order to maximize your benefits!

Cyber Security Hacking

Beef Up Your Cyber Security with R&D Tax Credits

It’s 2017. Everyone around you is using smart devices such as cell phones and virtual assistants. Along with these products, people are also using internet-enabled devices such as smart TVs, smart thermostats, smart light bulbs, and more. Even children’s toys can come internet enabled. This is what is called the Internet of Things (IoT).

Most high-level IoT devices such as gaming consoles or cell phones come with relatively high amounts of security to keep people out of your devices. However, many of the lower-level IoT devices such as smart TVs and smart bulbs can be shy of these security measures — whether it’s due to lack of space, lack of time, or lack of functionality in the device. That does not mean that hackers cannot take advantage of these devices, however. In fact, in October 2016 a hacker or group of hackers did just that, taking advantage of countless IoT devices to perform a distributed denial of service (DDoS) attack on a server company named Dyn who serves many websites.

Along with these cyber security fears, companies also often fear being hacked. Remember how HBO was hacked and blackmailed for Game of Thrones episodes? Or, even worse, earlier in the year when Equifax was hacked and millions of Americans were at risk for their information being stolen? The internet can be a scary place, and it’s important to protect yourself and your company against cyber attacks.

If you’re planning to adapt IoT devices into your business strategy or plan to market IoT devices to your customers, it’s important to make sure that those devices are secure. Since IoT breaches can lead to angry customers, you want to take that first step in making sure that your devices (and your customer’s devices) are secure, maintaining your business reputation and keeping your customers safe.

In addition, if your company is involved in developing new or improved products, processes or software in this area, you may be eligible for funding from federal and state research credit programs as well. Call us at 508-842-3232 to find out how.

We’re here to guide you to cost-saving measures that can help grow your business. If you’re ready for a consultation, contact Tax Credit Advisors today. Don’t leave money laying on the table — claim your tax credits today.

Join us for AME Dine & Learn: Don’t Leave Money on the Table

Our own Otto Kunz has been invited to speak at the upcoming Dine & Learn session, sponsored by AME (the Association for Manufacturing Excellence) on December 12th, 2017. This event takes place at:

Salvatore’s Restaurant
354 Merrimack St
Building 1, Entrance A
Lawrence, Massachusetts

The schedule is as follows:

6:00 p.m. – 6:30 p.m. Networking
6:30 p.m. – 7:00 p.m. Dinner
7:00 p.m. – 8:00 p.m. Presentation
8:00 p.m. Depart

Otto will be discussing research and development tax credits that are available to businesses of all sizes. Often times businesses fail to realize they can be reimbursed for research and development efforts, regardless of size. Otto will discuss how companies of all sizes can take advantage of research and development tax credits that are available to them and stop missing out on money-saving tax credits.

The cost for this dinner and discussion is $30 for a members and non-members, and $10 for a student member. You can register now on the AME website and reserve your space.

Season’s​ ​Greetings​ ​from​ ​your​ ​friends​ ​at​ ​TCA!

Tax Credit Advisors BulbWith​ ​all​ ​the​ ​news​ ​developing​ ​in​ ​Washington​ ​about​ ​the​ ​proposed​ ​tax​ ​overhaul,​ ​it’s​ ​important​ ​to remember​ ​that​ ​the​ ​existing​ ​tax​ ​rules​ ​are​ ​fully​ ​in​ ​place​ ​for​ ​the​ ​2017​ ​filing​ ​year.​ ​That​ ​means​ ​that when​ ​you’re​ ​filing​ ​your​ ​taxes​ ​next​ ​year,​ ​it​ ​is​ ​important​ ​to​ ​consider​ ​the​ ​federal​ ​Research​ ​Credit and​ ​the​ ​various​ ​state​ ​credits​ ​that​ ​might​ ​also​ ​apply.

The​ ​federal​ ​research​ ​credit​ ​dates​ ​back​ ​to​ ​1981,​ ​and​ ​you​ ​can​ ​expect​ ​to​ ​receive​ ​tax​ ​credits​ ​for eligible​ ​experimental​ ​development​ ​costs​ ​that​ ​your​ ​business​ ​performed​ ​during​ ​the​ ​2017​ ​filing year​ ​that​ ​are​ ​properly​ ​documented.​ ​This​ ​important​ ​incentive​ ​program​ ​​can​ ​amount​ ​to​​ ​​as much​ ​as​ ​​ten​ ​percent​​ ​of​ ​your​ ​qualified​ ​spending​ ​on​ ​people,​ ​materials,​ ​and​ ​related​ ​investments dedicated​ ​to​ ​figuring​ ​out​ ​how​ ​or​ ​whether​ ​you​ ​can​ ​make​ ​something​ ​new​ ​or​ ​improved​ ​by experimental​ ​means.​ ​This​ ​applies​ ​not​ ​only​ ​to​ ​new​ ​products,​ ​but​ ​also​ ​to​ ​improved​ ​ones,​ ​as​ ​well as​ ​new​ ​and​ ​improved​ ​processes,​ ​software​ ​and​ ​equipment.​ ​Also,​ ​because​ ​this​ ​is​ ​a​ ​tax​ ​credit​ ​and not​ ​merely​ ​a​ ​deduction,​ ​the​ ​credit​ ​value​ ​results​ ​in​ ​a​ ​​dollar​ ​for​ ​dollar​​ ​reduction​ ​in​ ​your​ ​tax​ ​bill!

In​ ​addition​ ​to​ ​the​ ​federal​ ​credit,​ ​numerous​ ​state​ ​credits​ ​are​ ​also​ ​in​ ​place.​ ​No​ ​matter​ ​where​ ​in​ ​the US​ ​you​ ​are​ ​located,​ ​we​ ​would​ ​be​ ​happy​ ​to​ ​help​ ​you​ ​figure​ ​out​ ​whether​ ​you​ ​qualify​ ​for​ ​these programs,​ ​and​ ​to​ ​help​ ​you​ ​file​ ​successful​ ​claims​ ​if​ ​you​ ​do.​ ​These​ ​federal​ ​and​ ​state​ ​benefits​ ​are intended​ ​to​ ​encourage​ ​companies​ ​to​ ​keep​ ​engineering,​ ​manufacturing,​ ​and​ ​software​ ​jobs​ ​here in​ ​the​ ​United​ ​States.

Things​ ​to​ ​keep​ ​in​ ​mind​ ​when​ ​considering​ ​research​ ​and​ ​development​ ​tax​ ​credits​ ​here​ ​in​ ​North America:

Many​ ​industries​ ​benefit​ ​from​ ​Research​ ​and​ ​Development​ ​tax​ ​credits

It’s​ ​important​ ​not​ ​to​ ​discount​ ​your​ ​industry​ ​just​ ​because​ ​it​ s​​eems​ ​​like​ ​you​ ​might​ ​not​ ​qualify.​ ​Any company​ ​that​ ​engages​ ​in​ ​experimental​ ​development​ ​can​ ​be​ ​eligible.​ ​The​ ​important​ ​thing​ ​is​ ​that the​ ​experimentation​ ​must​ ​be​ ​intended​ ​to​ ​develop​ ​or​ ​improve​ ​an​ ​existing​ ​product​ ​or​ ​process.​ ​For example,​ ​even​ ​a​ ​manufacturer​ ​of​ ​wire​ ​coat​ ​hangers​ ​can​ ​qualify​ ​so​ ​long​ ​as​ ​the​ ​aim​ ​of​ ​the experimental​ ​effort​ ​is​ ​to​ ​develop​ ​a​ ​new​ ​or​ ​improved​ ​technical​ ​capability.​ ​Such​ ​a​ ​company​ ​might try​ ​to​ ​reduce​ ​scrap​ ​rates,​ ​or​ ​improve​ ​cycle​ ​times,​ ​or​ ​reduce​ ​part​ ​weight,​ ​or​ ​engage​ ​in​ ​any​ ​of​ ​a number​ ​of​ ​other​ ​activities,​ ​all​ ​of​ ​which​ ​can​ ​be​ ​eligible​ ​for​ ​tax​ ​credit​ ​support.

Your​ ​company​ ​does​ ​not​ ​have​ ​to​ ​be​ ​of​ ​a​ ​certain​ ​size​ ​to​ ​be​ ​eligible​ ​to​ ​claim​ ​research​ ​and development​ ​tax​ ​credits

Big​ ​or​ ​small​ ​businesses​ ​can​ ​claim​ ​tax​ ​credits,​ ​as​ ​long​ ​as​ ​the​ ​processes​ ​they​ ​are​ ​developing​ ​and testing​ ​meet​ ​the​ ​eligibility​ ​criteria.​ ​Millions​ ​of​ ​tax​ ​credit​ ​dollars​ ​are​ ​left​ ​on​ ​the​ ​table​ ​every​ ​year because​ ​many​ ​companies​ ​think​ ​they​ ​are​ ​too​ ​small​ ​to​ ​claim​ ​these​ ​credits.​ ​Large​ ​conglomerate corporations​ ​aren’t​ ​the​ ​only​ ​ones​ ​that​ ​can​ ​perform​ ​research​ ​and​ ​receive​ ​funding.​ ​It’s​ ​important to​ ​know​ ​that​ ​even​ ​your​ ​small​ ​business​ ​can​ ​compete​ ​and​ ​claim​ ​research​ ​and​ ​development​ ​tax credits​ ​as​ ​well.​ ​Most​ ​US​ ​taxpayers​ ​who​ ​engage​ ​in​ ​experimental​ ​development​ ​can​ ​qualify regardless​ ​of​ ​company​ ​size.

Canadian​ ​companies​ ​can​ ​also​ ​benefit​ ​from​ ​tax​ ​credits

We​ ​also​ ​offer​ ​our​ ​services​ ​in​ ​Canada,​ ​where​ ​the​ ​federal​ ​Scientific​ ​Research​ ​and​ ​Experimental Development​ ​(SR&ED)​ ​credit​ ​serves​ ​a​ ​similar​ ​purpose.​ ​A​ ​number​ ​of​ ​provincial​ ​credits​ ​are​ ​also available​ ​and​ ​we​ ​would​ ​be​ ​happy​ ​to​ ​help​ ​you​ ​navigate​ ​the​ ​rules​ ​and​ ​requirements.​ ​This​ ​is​ ​all about​ ​keeping​ ​jobs​ ​here​ ​in​ ​North​ ​America!

As​ ​always,​ ​Tax​ ​Credit​ ​Advisors​ ​is​ ​here​ ​to​ ​help.​ ​If​ ​you​ ​want​ ​to​ ​find​ ​out​ ​if​ ​your​ ​company​ ​is​ ​eligible for​ ​research​ ​and​ ​development​ ​tax​ ​credits,​ ​we​ ​can​ ​assist​ ​you.​ ​Contact​ ​us​ ​today​ ​to​ ​get​ ​started.

Join us for the 13th Annual GBMP Northeast Lean Conference!

GBMP LEAN ConferenceJoin us for the 2017 GBMP Annual Northeast Lean Conference. This year’s conference will be held Tuesday and Wednesday September 19th and 20th at the DCU Center in Worcester, MA.

The Northeast Lean Conference was created by the non-profit Greater Boston Manufacturing Partnership (GBMP) to provide services, information and inspiration to Lean practitioners – from those just starting out to seasoned Lean leaders from the manufacturing, healthcare and other industries. The practical learning format features exceptional keynote and breakout presentations, expert panels, peer-to-peer discussions, hands-on simulations, interactive learning and sharing, and great networking opportunities.

Tax Credit Advisors is hosting a booth at the conference to answer any questions you may have about funding for your technical development and how you can earn money while improving your process, product and equipment technologies. We will also have regular presentations at our booth during both days. Each full day at the Lean Conference features numerous attractions, ensuring there’s something for everyone. It would be great to see you there!

Looking to attend? Click here for more information on how to register.

We also have an agenda for the conference available for you to download here. We can’t wait to see you there!

New Tax Code Overhaul Proposals Could Affect You

Money EnvelopeThere is currently a lot of uncertainty about a proposed tax overhaul coming as early as this summer. With information on the web, social media, and other places, it can be hard to discern how this tax overhaul may affect you and/or your business. Call us with any questions and we’ll provide the best analysis we can as more information becomes available.

Overhauling tax codes is never an easy task. Along with the time it takes to pass these new rules and regulations through Washington, long-term effects may not be seen immediately, and any benefits or detriments can take years to fall into place. Tax Credit Advisors keeps up to date with all of these tax codes, rules, and regulations to know how to better serve you and make the most out of your dollars.

The Federal Research Credit has been helping manufacturing and software companies to keep engineering and software jobs here in the US since 1981, and was kept in place after the most recent overhaul in 1986. We are here to help you claim your benefits successfully both at the federal and state levels, no matter what happens in Washington.

Thank you as always for the opportunity to serve you!