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The Opportunity
In a press release on the new R&D regulations, Treasury Secretary Paul O’Neill stated:
"We need to use every tool available to encourage growth, investment and job creation in our economy. The Research Credit is a significant element of President Bush's tax plan - a plan I fully support and am committed to enacting as quickly as possible. The regulations issued by the Clinton Treasury on January 3, 2001 limited the value of the current Research Credit for those who have chosen to rely on it."
The R&D Tax Credit Opportunity:
- A hidden and immediate source of cash for many small and mid-size companies;
- A significant reduction to current and future years federal and state tax liabilities;
- Over $7.5 BILLION in just federal R&D tax credit benefits are given out annually;
- Approximately 80% of the $5 Billion goes to a few of the nation's largest companies;
- Every successful company is potentially eligible for an R&D tax credit of some amount - many companies are unaware their day-to-day operations can qualify for the R&D Credit;
- The 20% research tax credit is not a deduction. It is an actual dollar-for-dollar credit against taxes owed or taxes paid. Plus the taxpayer may be able to expense all such costs in the year incurred;
- A business can take the credit for all open tax years - generally the last three or four years plus the current year;
- Additional years may be available if taxpayer is in a net operating loss or alternative minimum tax position;
- Tax credits may carry forward 20 years;
- Recent tax laws are taxpayer friendly and bring additional benefits.
Benefits Realized
The benefits our clients have realized as a result of having alliantgroup conduct R&D tax credit studies for them are as follows:
- Realized millions of dollars of tax credits, resulting in cash back from the IRS
- Permanent tax savings and financial statement benefit
- Created a vehicle to realize additional tax savings in future years
- Increased the market value, earnings power and cash flows of their Company
- Lowered the Company’s effective tax rate
alliantgroup has identified Research and Development tax credits for companies in a wide array of industries. Specific case studies shown below with figures on an annual basis include:
- Industry: Chemical Manufacturing
- Revenue: $6,000,000
R&D Tax Credits Realized: $30,000
- Revenue: $13,000,000
R&D Tax Credits Realized: $7,000
- Industry: Engineering
- Revenue: $15,000,000
R&D Tax Credits Realized: $2,000,000
- Industry: Food Sciences
- Revenue: $60,000,000
R&D Tax Credits Realized: $50,000
- Revenue: $25,000,000
R&D Tax Credits Realized: $25,000
- Industry: Machine Shop / Tool & Die
- Revenue: $3,000,000
R&D Tax Credits Realized: $30,000
- Industry: Manufacturing
- Revenue: $18,000,000
R&D Tax Credits Realized: $40,000
- Revenue: $2,500,000
R&D Tax Credits Realized: $13,000
- Revenue: $35,000,000
R&D Tax Credits Realized: $300,000
- Industry: Product Manufacturing
- Revenue: $18,000,000
R&D Tax Credits Realized: $40,000
- Revenue: $2,500,000
R&D Tax Credits Realized: $13,000
- Revenue: $35,000,000
R&D Tax Credits Realized: $300,000
- Industry: Software Development
- Revenue: $750,000
R&D Tax Credits Realized: $20,000
- Revenue: $8,000,000
R&D Tax Credits Realized: $90,000
- Revenue: $30,000,000
R&D Tax Credits Realized: $275,000
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