Filing taxes is not a task associated with ease or enjoyment. Understandably, companies seeking to take advantage of R&D tax incentives may be tempted to put off claiming R&D credits until another year due to the time and energy proper documentation requires.
It is in every company’s best interest, however, to claim credits sooner rather than later so you have as many records from past years as possible. It should be noted that these claims must be in accordance with the IRS audit technique guide.
Having the right documentation along with professional audit representation puts businesses on the right path to successfully claiming the R&D credits they are entitled to.Claiming R&D Tax Credits Has Never Been Easier
Ever since the Alternative Simplified Credit (ASC) was introduced in 2007, it has been markedly easier for businesses to claim R&D credits while adhering to IRS rules and regulations.
The ASC option allows you to submit for R&D tax incentives with a simplified approach. Previously, businesses had to analyze and document R&D activities and sales revenues from nearly 30 years ago to the present day in order to claim credits.
Only three years of records are now required to calculate credits in accordance with credit rules thanks to the 2007 ASC calculation.
Providing even more benefits to companies seeking tax solutions, new regulations introduced in June 2014 allow companies to make retroactive ASC elections. These tax solutions should not be underestimated given previous rules barring taxpayers from making claims on R&D credits for earlier years.
Does Your Business Qualify?
Businesses entitled to make R&D credit claims vary greatly, ranging from tech and biotechnology companies to software developers.
If your company conducts research through experimentation and the scientific process of eliminating uncertainty, and that research is primarily technological, you may qualify for the credit. Another factor to determine eligibility is if your company employs an engineer on staff. If any of the previous characteristics describe your business, it is in your best interest to investigate whether you do in fact qualify.
How To Claim Credits If You Qualify
If you are a company that incurs R&D expenses and your recordkeeping is up to date, you have the option of claiming R&D credits under ASC. The IRS audit technique guide provides helpful information about what type of documentation is required.
Most importantly, you or your professional audit representation specialist must analyze whether your records meet the requirements necessary to prove you are entitled to the credits you claim.
Many businesses are unsure of what documentation is required to sustain their R&D credits under an IRS audit if they haven’t claimed under ASC in the past.
For example, filing a high-level credit under your income tax may result in an IRS or state taxing authority audit a few years later. Because the credit was claimed at a high level, it is crucial that your company have the necessary books and records to substantiate the claim.
If the intricate details of substantiation and documentation seem daunting, a qualified audit representation specialist is able to guide you through the process. Finding beneficial tax solutions when working to claim R&D tax credits is challenging, but that doesn’t mean you have to do it alone.
Ready to find out if your business qualifies for R&D tax incentives? Call 866-444-4880 to speak with a tax expert at Corporate Tax Incentives and find out if your business is eligible. 
