Are You Missing Out on the Research Tax Credit?
As we find ourselves in the fourth industrial revolution — dubbed Industry 4.0 — we are seeing a shift away from manual processes into an overwhelming drive towards automation technology in the design and manufacturing of products. The integration of automation technologies into our longstanding methods of work is crucial to make us competitive and provide Americans the opportunities to take on and improve the technical roles integrators need to fill moving forward. The implementation of interconnectivity, 5G, robotics, machine learning, real-time data, and other technologies are becoming increasingly essential.
As technology becomes fully integrated at all levels of industry, so does the opportunity to maximize your company’s research and development tax credit.
Research Tax Credit
The Research Tax Credit (RTC) is available to companies who are developing or improving products, processes, techniques, formulas, inventions, or software. You could easily qualify for the RTC if your Businesses is related to technology, industrial production and design, but also machine shops, tool and die shops, and custom machine manufacturers can have strong claim profiles.
This dollar-for-dollar credit can be used against your federal income tax liability means that companies can get a dual benefit on their tax returns; the deduction in the year the expenditure is incurred, as well as by claiming the research tax credit. In some cases, the credit can used against your payroll tax liability.
Join MMA and globally recognized subject matter expert Diane Stogiannes, B.Sc., President of DST Advisory Group for an informational virtual meeting on Tuesday, 11/9/21, at 9:00 a.m. to learn how your company can access this dollar-for-dollar credit against your federal income tax liability. Learn more and register online.
Examples of Qualified Research Activities
Many taxpayers prematurely disqualify themselves from eligibility or have not adequately reviewed their operational activities to maximize their claims. Potential qualifying activities within this space is vast and claiming the RTC is highly widespread in the systems integration space.
- Interconnection – where machines, devices, sensors, and humans possess the ability to connect and communicate with one another via the Internet of Things (IoT).
- Information Transparency – the vast amount of information and data collected by operators can be used to inform decisions and improve upon processes
- Technical Assistance – systems can aid and assist humans in decision making, problem solving, and can help humans with difficult or unsafe tasks.
- Decentralized Decisions – cyber physical systems have the capability to make decisions on their own and perform tasks autonomously.
Now, more than ever, Industry 4.0 technologies are becoming part of regular operations for businesses across all sectors.
Some examples of industry applications are:
- Designing or integrating Radio Frequency Identification (RFID) part tracking on production lines.
- Using cloud computing resources to develop methodologies to increase processing power to perform complex calculations.
- Developing software to use augmented reality to provide customers an in-car experience without the need to travel to a dealership.
- Manufacturers using autonomous robots to transport parts between assembly stations.
- Testing new mold/die designs that were engineered and developed through additive manufacturing, including experiments with new alloys or other composite materials, and the processes to needed to adequately bond them to the surface.
- Providing product and system solutions, including design engineering and mechanical fabrication.
- Designing new lines or configurations by integrating communication or technologies together in a non-traditional manner (e.g., using a known technology from a different industry into your application).
DST Advisory Group is an MMA Premium Associate Member and has been an MMA member company since September 2021. Visit online: www.dstadvisorygroup.com.
DST’s technical team is comprised of engineers, with specific experience in manufacturing. Coupled with their legal and tax team, they can construct a solid claim based on engineering facts, supported by legislation and regulations to help you maximize your legitimate Research Tax Credit claim.
About the Author
Diane Stogiannes is the President of DST Advisory Group. She has over 15 years of consulting experience with R&D Tax Credits, servicing Clients in both Canada and the United States. She may be reached at 248-443-3361 or firstname.lastname@example.org.