Research And Development Tax Credits
The federal government and the state of New York both provide generous tax credits to incentivize research and development. It is not necessary to be in a cutting-edge field or to boast a phenomenal breakthrough. The R&D tax credit rewards the business’s risk and effort and recognizes that for every successful innovation, there will also be failed experiments and research dead-ends.
The tax law attorneys of have helped clients throughout New York qualify for significant R&D tax credits (federal and state). We advise businesses on eligible expenses to take full advantage of the program. We have also successfully defended clients in audits by the IRS or New York State Department of Taxation and Finance when R&D credits are disputed.
Who Can Take The R&D Credit?
The research and development tax credits are available to businesses of all sizes across all industries, including but not limited to:
- Biotech and pharmaceutical
- Software and technology
- Manufacturing
- Transportation and distribution
- Financial services
- Health care
- Real estate and development (including multifamily housing)
- Retail and e-commerce
- Sports and entertainment
R&D credits have been around for four decades. The PATH Act of 2015 made research credits more accessible to small businesses and startups. The tax credits can be taken against the alternative minimum tax or (for new businesses) against the first few years of payroll tax liability.
What Counts As Research And Development Expenses?
Research and development does not have to produce groundbreaking results to qualify for the credit. But it must constitute effort or investment in innovation above and beyond the normal course of business.
The IRS recognizes four main categories of R&D expenses: (a) taxable wages of employees directly involved in innovating activities, (b) supplies for qualified activities, from equipment to extra utilities costs, (c) payments for contracted research by third parties and (d) computing costs such as cloud services. The IRS also specifically excludes certain expenses such as market research and data collection. Our attorneys work with businesses to conduct a credit study to identify which expenses can and cannot be claimed, so that owners and executives can confidently apply for full R&D credits. We also assist clients in getting tax credits returned to them as actual funds.
Are You Leaving Money On The Table?
Many eligible businesses decline to pursue R&D tax credits, believing they don’t meet the criteria or fearing they will run afoul of the IRS. can analyze your research expenses to gauge your eligibility and potential credits. We can also assist clients in filing amended IRS returns to retroactively claim the R&D credit for prior years. If your business is audited, our attorneys are accomplished in tax controversy resolution and will vigorously defend your claimed credits.
Schedule a consultation with our veteran tax lawyers to explore the R&D tax credit for the current fiscal year or to discuss planned investments in technology, product development or trade processes. Our mission is to maximize your tax relief without triggering IRS exams or penalties for disallowed credits. Call our Manhattan law office at 212-235-1817 or use our online contact form. We can arrange in-person meetings or consult by phone or video conference.