Are you Documenting your Research Activities Correctly? The Wrong Answer Could Be Costing You Thousands

Don’t neglect important steps to claiming credits you’ve earned

Any company that is making an effort to improve or develop their products, processes, or software can likely benefit from the Research and Development Tax Credit. R&D is a dollar-for-dollar credit that businesses can use to offset against federal and state tax liabilities and to reimburse costs spent performing the qualifying research. In order to qualify, businesses must meet the standards put into place by the IRS.

Don’t Dismiss Documentation

Companies should take detailed notes, and save all paperwork acquired during the research and development process in order to ensure that the maximum amount of value possible is obtained through the credit. A lot of companies miss out on all of the tax credits they could obtain simply because they don’t have proof of all of their expenses. Documentation is also key to passing the 4-Part Test, put into place by the IRS. The test looks at the nature, purpose, process, and uncertainty of the research activities being performed. 

Our step-by-step guide to documenting research activities:

  • Technical Uncertainty: While doing the work, keep track of any documentation that describes the project and technical uncertainty pertaining to whatever it is you’re working on. Documentation of technical uncertainty can include time sheets, design materials, feasibility studies if applicable, project records, and meeting notes.
  • Process of Experimentation: Documenting your process of experimentation is more challenging because of the wide variety of ways experimentation can be done. Documentation includes simulations, design specifications, prototype suggestions, drawings from engineers, descriptions of lessons learned from project failures, and communications regarding testing methods.
  • Technological in Nature: Documentation to support the technological nature of a project can include gathering presentations and meeting notes, designs of system architecture, technical data, and source code to hand into your third-party tax advisors.
  • Qualified Purpose: Compiling documentation to prove the qualified purpose of your businesses’ research and development activities can include copies of internal presentations, project plans, the outline of benefits, meeting notes, and case studies.
  • Remember Third-Party Agreements: It is common for companies to work with outside contractors and vendors when performing their research activities. These outside vendors can provide assistance with many different aspects including research, design, and other services. Businesses must ensure they make copies of any contracts to submit to the IRS.

The Difference is Real

National Tax Group is comprised of in-house tax experts and engineers that specialize in the research and development tax credit. We are committed to each company that we work with and stand by their side from their initial FREE assessment of benefits, to the submission of documentation to the IRS. Contact us today to get started.

Make Saving Money a Priority in 2019

Start the New Year With Tax Advisors by Your Side

The start of the new year brings about new year resolutions, and change. When sitting down to map out your business goals for the year ahead, consider adding a third-party tax firm to your plan in order to maximize off the tax benefits and savings you’re eligible for.

There are significant tax benefits out there that aren’t being claimed because the individuals, businesses, and corporations that can benefit from them are unaware that they exist or that they can take advantage of them. Make it your mission this year to educate yourself on the highly cost-effective tax breaks available to you through the 179D Energy Efficient Tax Deduction, Research and Development Tax Credit, Cost Segregation Studies, and 45L Energy Efficient Home Credit.

Align Yourself With a Trusted Tax Consultant

Our main agenda when working with our clients is always to provide prime tax-saving services, and to be by your side throughout the entire process. As your trusted tax firm, we make the process simple and take care of all of the documentation needed for submission to the IRS. We assure our clients, payment will not be collected unless a return on investment is able to be obtained. Audit Support is also included at no additional cost.

The Difference is Real with National Tax Group

When you work with National Tax Group, you aren’t just getting tax professionals with 50+ years of experience collectively. You’re also getting real people who care about helping you obtain top-dollar amounts out of your tax benefits. Whether you’re dealing with our sales team, office staff, or the president of our company, our entire staff is equally invested and well versed in your specific needs. We truly care about our clients and work to make the tax-saving process a smooth one.

What is a Cost Segregation Study?

Unlock the Hidden Capital in Your Building

Building owners are able to qualify for a lucrative engineering-based study that will evaluate the components which currently exist inside of a building, and reclassify real property as personal property in order to accelerate depreciation in the shortest amount of time permissible. When a study is performed, real and personal property are categorized, unlocking otherwise unnoticed and unused capital that can be invested back into the business. After a study is performed, building owners can see a substantial increase in their building's cash flow through these significant tax savings.

The Fundamentals of Cost Segregation

Building and property owners who haven’t taken advantage of cost segregation studies are missing out on substantial tax-savings. Additions and small installments an owner has made to enhance the aesthetics of their building, can allow for significant tax savings. This includes light fixtures, and window installation, the building’s walls, roof, foundation, doors, beams, and fire protection.

How Does Cost Segregation Work?

Some components of a building depreciate at a faster rate than others, and need to be replaced before their typical 39-year depreciable life.

Through this study, engineers examine all components and asset classes in a building, and reclassify them to values of 5, 7, or 15-years, rather than defaulting to the traditional 39 years.

Even if a building has had a study performed in the past, there may have been missed opportunities for increased cash flow.

The Difference is Real

National Tax Group is a third-party tax company looking to help businesses claim tax incentives. We truly care about our clients and work to make the process a smooth one. Our engineers are prepared to perform a site visit anywhere in the United States. There’s no risk in picking up the phone and having us evaluate the savings your building can get you. Contact us to start the process of unlocking the hidden capital in your building.

Proposed Tax Bill to Extend Profitable Tax Breaks

GOP Chairman and House Republicans Unveil Significant Tax and IRS Package

An end of year tax bill proposed by the Republican Senate plans to extend lucrative tax breaks through the end of 2018, significantly benefiting tax payers.

Late Monday, November 26th, House Ways and Means Committee Chairman Kevin Brady (R-Texas), released an end of year tax package to the public that would have a significant impact on all taxpayers, especially those who can take advantage of the Section 179D Deduction, and the 45L Energy Efficient Home Credit. Along with making edits to the Tax Cuts and Jobs Act and looking to revamp aspects of the IRS, the new bill would extend the tax incentives available for commercial building owners, contractors and builders, and architects through the end of 2018.

The bill is expected to be heavily discussed in Washington amongst the Senate Republicans and Democrats in the days and weeks to come. While a date of a vote has not been announced yet, you can expect National Tax Group to keep readers informed on significant updates.

For a full review of the 297 - page tax and IRS package, read the proposed bill on the United States Government Website here.

How the Cannabis Industry is Earning Big in Tax Credits

Growing Your Business with the R&D Tax Credit

The development and selling of recreational and medicinal marijuana has dramatically increased as states across the country continue to pass legislation legalizing marijuana. Research and development is critically important for the cannabis industry’s current and future growth. Cannabis growers and other related businesses are already performing qualifying research activities in their day-to-day operations that qualify them to take advantage of the research and development tax credit.

The R&D tax credit was created as an incentive for businesses across different industries to take innovative measures when developing or improving their products, processes, or software. Companies within the cannabis industry are constantly working to expand the various strains and consumption options in order to meet the demand and growth of the industry, and are performing qualifying research and development activities in the process.

Medical and recreational marijuana sales are expected to climb to $22 Billion by 2022, according to the 2018 edition of the Marijuana Business Daily.

With the growing legalization of recreational and medicinal marijuana comes the increase in the demand for marijuana farms, pharmaceutical companies, and dispensaries. These companies are regularly coming up with more efficient methods of creating the products, and these innovations can often result in qualifying for the R&D tax credit.

Qualifying cannabis-industry related research activities include

  • Enhancing the efficiency of the growing and harvesting process
  • Developing new strains of cannabis through the use of genetic and cross-breeding techniques
  • Developing new systems for indoor growth
  • Performing testing to improve or speed up a harvest cycle
  • Developing improved technologies for delivery of cannabis-derived substances
  • Creating new ways to prevent mold or plant loss
  • Developing unique software analytical tools for strand identification

Don’t Miss Out On R&D

Leaders in the cannabis industry often miss out on the lucrative savings made available through the R&D tax credit simply because they’re unaware that they can qualify for it. Our tax experts at National Tax Group will perform a free assessment of your benefits and determine the credits you can earn. This industry is only going to continue to gain momentum, as is the amount of current and future businesses that are able to reap significant savings through the research and development tax credit.  Contact us today to get started. 


PATH Act Creates Permanent Expansion of the R&D Tax Credit

Permanent Tax Relief to Reward Business Innovation

Companies across various industries are able to take advantage of the R&D Tax Credit by offsetting their earned credits against costs their company spent performing research activities to develop or improve their products, processes, and software. Even though the R&D credit was created to boost innovation within United States business and is an extremely lucrative credit, it has not always been a reliable tax break and has only recently become a permanent credit.

The Protecting Americans from Tax Hikes Act of 2015, also known as the PATH Act, has made the credit permanent for the first time in its 34 years, providing stable tax relief to business owners. Before R&D was permanent, companies would anxiously wait to see if the R&D Tax Credit would still be around the following year.  

Offset As Much As $250,000 Against Payroll Tax Liabilities

Besides making the Research and Development Tax Credit permanent, the PATH Act has also paved the way for startups and small businesses to take advantage of the credit. These companies can offset the R&D Tax Credit against their payroll tax liabilities. Traditionally, these companies weren’t able to apply for the credit because they would often remain in losses during their early years of business, before they began generating a profit.

Now, these companies that have been shutout in the past can offset as much as $250,000, and reward their innovative initiatives.

Qualifications for Startups and Small Businesses to Claim R&D

  • Business must have gross receipts of less than $5 Million within the tax year in question
  • Business cannot have any gross receipts dating further back than 5 years
  • Startups cannot be a tax-exempt organization under section 501

Now that the R&D Tax Credit has been made permanent thanks to the PATH Act, businesses can plan to benefit from the lucrative credit for the research and development activities they are performing, and know that their efforts are going to be rewarded on their tax returns.

Tax Relief Available for Architects

Earn Tax Credits for your everyday work activities

Architects and designers are able to take advantage of the R&D tax credit, which rewards significant credits to companies that perform qualifying research activities in order to develop or improve their products, processes, or software. Many companies within the architectural industry fail to take advantage of the credit simply because they are unaware that they can qualify. Architects are frequently working on projects that seek to advance the science or technology of their designs.

Reward Daily Efforts with Money Saving Credits

Architectural firms typically spend around 60-75% of their time working on the conception and design of the projects they’re working on. It is during these processes that qualifying research and development activities typically take place. Activities that may seem like standard practice can actually be the means of claiming R&D Tax Credits.

Eligible Daily Activities Include

  • Developing conceptual ideas and designs
  • Engaging in engineering activities
  • Developing and designing site features and orientations
  • Developing construction documents
  • Developing and designing master plans
  • Developing new or innovative designs to meet LEED certifications or energy efficient specifications
  • Computer-aided design (CAD) and building information modeling (BIM) activities
  • Developing new or improved designs
  • Evaluating alternative designs to meet or overcome complex client requirements, site conditions or building codes

Passing the 4-Part Test

Architectural firms that are performing research activities must pass the R&D 4-Part Test, created by the Internal Revenue Service in order to claim the tax credit. The 4-Part test takes an in-depth look into the Purpose, process, uncertainty, and nature of the research activities. Learn more about the 4-Part Test here.

Trust National Tax Group for Your Tax Needs

Our team is comprised of tax experts and engineers with over 50 years of experience working across various tax saving industries, and helping our clients acquire the most out of their tax savings. Don’t overlook this lucrative credit. Contact us for a free assessment and start the process of obtaining R&D.

Reallocate 30% of Total Hotel Property Assets Through a Cost Segregation Study

Accelerate Depreciation, Improve Cash Flow

Hotel owners are able to qualify for accelerated depreciation through a Cost Segregation Study. This lucrative engineering-based study can reallocate up to 30% of total assets to 5,7,15, or 39-year life classes. Hotels that have been purchased or constructed since January 1st, 1987 qualify for accelerated depreciation. Any updates or renovations since the hotel’s purchase or construction can also qualify for depreciation.

Components that are examined during the study include the hotel’s walls, roof, foundation, lighting, doors, beams, windows, and fire protection. Through a cost segregation study, real and personal property are categorized into acquisition or construction costs.

Personal Property Hotel Assets Can Include

Flooring Choices - Flooring can include hardwood, engineered wood, laminate, cork, or linoleum

Decorative Lighting - Decorative lighting can include hanging light fixtures, chandeliers and pendants, wall sconces and wall lights, and accent lighting

Electrical Systems - Electrical systems can include circuit breaker panels, transformers, branch circuits, and meters

Plumbing Systems - Plumbing systems can include plumbing drainage venting, fuel gas piping, potable cold and hot water supply, and hydronics. 

Power Generators - Power generators can include thermal generating plants, cogeneration, nuclear plants, fossil-fueled, combined-cycle and Biomass Plants. 

Our team of engineers and tax experts perform cost segregation studies that utilize the Modified Accelerated Cost Recovery System (MACRS), which is the method of depreciation that is mandated by the IRS. The MACRS is applied to short-life assets, which accelerates depreciation and reduces the tax burden of the hotel owner.

Running a hotel is no easy task and comes with various expected and unexpected expenses. Our tax professionals work with hotel owners and industry professionals to reap the maximum amount of tax savings. Contact us today for a free assessment of benefits.

Cash in on R&D Tax Credits for Work Your Company is Already Doing

You Don't Have to Work in the Science Field to Claim R&D

When the average person thinks of the Research and Development Tax Credit, they likely imagine scientists in lab coats, working in a lab with test tubes to perfect their latest experiment. However, that’s simply not the case anymore, and companies within various industries are able to take advantage of the R&D tax credit.

R&D Tax Credits were created by the United States Government as an incentive for businesses to take innovative steps to develop or improve their products, processes, and software. While some companies are aware that they can qualify and benefit from the credit, there are many companies that are not taking advantage of their earned credits, simply because they are unaware that they qualify. Read about the R&D Tax Credit, and the different industries that are able to take advantage.

FAQ's Regarding R&D Tax Credits

Q. How can startup companies take advantage of R&D?
Startup companies can apply the credit against their payroll tax liabilities, even before they begin to generate a profit on their products, processes, or software.

Q. How do I know if my company qualifies?
A. More companies than ever are able to qualify for R&D tax credits. Since the credit is designed to promote innovation and creativity, if you are performing any type of project that is different, it is highly likely you can qualify.

Q. Why hasn’t my CPA brought this up before?
A. It is a common misconception that only specific, “White Coat” companies within the science and research fields are able to qualify for the credit. However, companies across various industries can, but many aren’t aware of this.

Q. Does my company have to be in a specific industry to qualify?
A. No. Numerous industries are able to qualify for the research and development they’re performing. Qualifying industries include software development, cosmetic, food sciences, oil and gas, web development, construction, and agriculture. 

Q. Can R&D credits be claimed for a prior year?
A. Yes. R&D Credits can be claimed for a prior tax year as long as the amended return is filed within three years of the original filing date.

Q. Is it worth my time to claim the R&D credit?
A. Definitely. The R&D Tax Credit remains one of the most valuable incentives offered by the U.S. Government for businesses to remain competitive.

Q. What is the 4-Part Test?
A. The 4-part test, created by the IRS, is the main qualifier that all research activities must pass in order to reap the benefits of this lucrative credit. The 4-part test examines the Nature, Purpose, Process, and uncertainty of the research activities being performed. Learn more about the R&D Tax Credits 4-part test here.

Companies performing unique research activities can qualify for the R&D tax credit. Contact us for a free assessment today.