Tax & Accounting Blog

Overwhelmed by Calculating and Substantiating Your R&D Tax Credit?

Global Tax Compliance, US Income Tax Compliance, WorkFlow Manager September 20, 2011

Does calculating and documenting your R&D tax credit take valuable tax department resources or outsourcing dollars?  

Does the time it takes to gather the necessary information or defend your tax credits prevent you from focusing on other tax issues?

Does the thought of revamping your R&D tax credit process overwhelm you?

If the answer is yes to any of these questions, consider some of these strategies:

  • Take a phased approach: Automating everything at one time may or may not be the answer for you. If you are resource constrained, consider taking a phased approach. A phased approach might include only surveying some groups or focusing on another area such as data gathering, management, tracking, or calculating.
  • Start with a short online survey: Perhaps the IRS would like five pages of detailed information about R&D activity. However, a large survey may result in less participation from the subject matter experts you rely on. If this is a new process, starting off with a one page survey can ease participants into a more automated process. Once they realize how convenient the process is, you can include additional questions or pages in future quarterly cycles.
  • Solicit feedback: If this is a new process for your team, gathering feedback from key participants can help determine the automation changes that will work best for your organization.
  • Provide incentives: Let’s face it, your process can only be successful if you have the cooperation of the individuals actually engaged in R&D activities. Sharing project success stories or giving them a chance to win prizes such as iPads and gift cards for completing a survey within a time period can help improve cooperation.
  • Partnering automation technology and tax consultants: By combining automation technology and tax consultant expertise, you can minimize the more manual parts of your process. Once these steps are automated, the control of the R&D tax credit results, workpapers, and reports are shared by both you and the consultants.  The availability of this information can help you become more comfortable with your R&D tax process, and can ultimately result in bringing more steps of the process in-house in the future.

Live near San Jose, CA or Costa Mesa, CA? Join us at an upcoming luncheon where we will explore advanced strategies to automate the R&D Tax Credit Process. Click Here to contact us for more information.