The tax savings opportunities provided via these credits are not exclusively limited to those companies in “traditional” development fields, such as high-tech, bio-tech, pharmaceutical, etc., or big companies with dedicated internal resources, or those companies utilizing an outside, typically “Big 4” accounting firms.

Simply stated, any company that conducts activities that meet the IRS’s definition for “qualified research” can take advantage of these tax credits. In general, this means that if your company is involved in activities that IMPROVE existing products and processes or design, develop, or create NEW products or processes, it is eligible.

Companies that take full advantage of these credits can substantially reduce their overall tax liability each year.

It comes as no surprise, of course, that strict regulatory guidelines exist that define what constitutes “qualified research” activities. In order to substantiate tax credits claimed, companies must gather and present contemporaneous documentation that demonstrates that regulatory guidelines are being met.

Generating required R&D Tax Credit support documentation is a time-consuming activity that can potentially overwhelm internal tax department resources. Because of this, corporate tax departments often explore the two primary options for R&D Tax Credit documentation assistance outside of the tax department: an external R&D credit study, usually conducted by one of the “Big 4” national accounting firms, or an internal questionnaire approach that shifts the burden of directly documenting R&D activities to the Engineering organization.

For large corporations, an external R&D Tax Credit study conducted by an outside "Big 4" accounting firm is often the right approach to pursue. This is particularly true for companies that have never taken advantage of R&D Tax Credits and are literally starting at “ground zero.” However, once a company has outsourced an initial R&D Tax Credit study, contracting with the “Big 4” to perform similar studies in subsequent years can become cost prohibitive.

Utilizing internal Engineering & Development resources to document R&D activities via a questionnaire is also an approach that works for certain companies under certain circumstances. For example, companies with a significant Engineering management layer in their organization can often successfully implement a questionnaire system for gathering R&D Tax Credit documentation. However, in many companies this approach tends to excessively draw Engineering resources away from their primary objective of moving the company forward through innovation and invention.

FortisTCS provides an outsourcing option that is an alternative to the approaches described above. We are able to provide professional R&D documentation services at a fraction of the average “Big 4” rate for similar services. Our approach also minimizes the disruption of your organization. Your personnel will always be involved in any R&D Tax Credit study since it is their activity that must be documented. The key is to find an approach that minimizes the impact on your staff while maximizing the credits that can be claimed.

The FortisTCS approach to gathering and compiling R&D Tax Credit documentation is a systematic process utilizing our proprietary on-line technology that focuses on identifying and interviewing the appropriate personnel within your organization. Information gathered during these on-line based interviews becomes the foundation for the written narratives that are generated for the purpose of documenting qualified R&D activities.

The FortisTCS approach also relies heavily on the utilization of pre-existing internal, contemporaneous documentation to support claims that credit-worthy activities have occurred within a given department. We can help identify internal reports that will have the maximum positive impact in supporting credits claimed. This cost-saving approach allows you to save time and money documenting R&D Tax Credits by taking advantage of reports that have already been generated for other purposes.

When considering whether your R&D Tax Credit documentation endeavor should be outsourced to FortisTCS, consider the following:

1. Utilizing FortisTCS as an extension of your tax department allows existing tax department personnel to continue working on their current assignments.
2. FortisTCS’ professional documentation packages demonstrate to the IRS that you understand and have followed regulatory documentation guidelines. This puts you in a better position to negotiate credit amount settlements with the IRS because you can fully support the inclusion of certain departments in your credit calculation.
3. FortisTCS works hard to minimize the amount of time required for an R&D interview, and we respect the fact that your Engineering organization exists first and foremost to innovate. Our process is minimally disruptive; this helps us to earn trust and respect from your Engineering group.
4. R&D Tax Credit documentation services is a primary tax consulting service offered by FortisTCS. We will be there for you year after year. As we gain familiarity with your organization, you will realize a savings in fees from the ensuing gains in efficiency.
5. FortisTCS strives to build a personal relationship with each client. Because we do all of the work ourselves, there isn’t a revolving door of staff-level personnel conducting the interview process each year. We understand that we are asking your engineers to discuss highly sensitive, highly confidential information. Generating the best documentation requires that engineers trust us enough to engage in open discussions with us. When engineers see the same face each year, a trusting relationship ensues.

To better illustrate the FortisTCS R&D Tax Credit documentation process, we have outlined below the typical “flow” for an R&D engagement. As each engagement is unique, however, please note that we will always work with you to arrive at the best approach for your organization.

1. Organizational review and product/process background research:
   FortisTCS thoroughly reviews your organizational structure prior to beginning the R&D Tax Credit documentation process. A roadmap is generated which identifies the key contacts within the organization who will be interviewed as part of the documentation process. The roadmap is designed to enable a targeted data collection process that minimizes the disruption of your engineering staff.
2. Creation of key reports:
   Payroll and G/L data is formatted into custom reports to be utilized during the data collection process. These reports, once populated with data, will ultimately become the support for your tax credit calculation.
3. R&D Tax Credit seminar:
   An optional tax credit presentation is prepared for Engineering Management personnel detailing the benefits of the R&D Tax Credit and providing background regarding the regulatory foundation of the credit.
4. Interview process and documentation generation:
   FortisTCS meets with key individuals within your organization and gathers support data for the R&D credit calculation. Detailed, technically accurate written narratives are generated for all pertinent departments describing the nature of R&D activities undertaken and how those activities meet the IRS’s four-part test for qualified research and development.
5. Final deliverable:
   All R&D Tax Credit support documentation is organized into custom binders along with a detailed summary of the data collection methodology utilized—a package that is 100% audit-ready!

If you have not already connected with a FortisTCS consultant, please call Santosh Varughese, Managing Director, at (713) 830-7638 ext. 320, or click here to contact the experts at FortisTCS via the web.