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When business owners, chief financial officers, and corporate accountants consider R&D tax credits, they often conclude that only high-technology companies, innovative scientific start-ups, and other leading-edge enterprises qualify for the credit. What probably doesn’t come to mind are companies involved in the manufacturing of precast concrete components.
But the truth is, while medical device, biopharmaceutical, and microelectronics companies have been taking advantage of R&D tax credits for decades, other industries are leaving money on the table by not taking advantage of the valuable credit allowed by the IRS.
One example is the precast concrete industry and companies involved in the design, development and fabrication of concrete components used in constructing pumping stations, drainage systems, bridges, water-reclamation facilities, and other private and public infrastructure systems.
As experienced tax credit advisors to the precast concrete industry, our experience has shown that many of these companies are simply unaware of the significant R&D tax credit benefits available to them. For example, a precast concrete company with $5-10 million in annual revenue that is not taking advantage of the current R&D tax regulations could be missing out on over $60,000 dollars in federal R&D tax credits and as much as $45,000 in state credits.
A key consideration in claiming this kind of tax credit cash is being able to quantify legitimate development-related manufacturing activities. While there are many, these can include:
- Establishing or enhancing the performance, quality, reliability of precast concrete structures for customer specific applications
- Exploring new concrete materials and casting methods, which also involve technological uncertainty require numerous iterative trials
- Conducting multiple rounds of hypothesis formulation and testing to achieve fully satisfactory results
- Employees’ time spent for field inspections, testing new materials, as well as proper application, installation and repair training
About R&D Tax Credits
The R&D Tax Credit was created by Congress to promote innovation and jobs. In fact, federal and state R&D tax credits can amount to as much as 20% of the costs incurred in developing new products, processes, and software as well as improving existing products, processes, and software. The R&D Tax Credit is not a deduction; it is a dollar-for-dollar credit against taxes owed or taxes paid.
If you’re involved in financial management or tax reporting for a precast concrete business and suspect you’re not taking full advantage of the tax credits available to you, contact the R&D tax credit specialists at Intrepid Advisors. We can discuss ways to reduce your tax burden and help you attain the R&D tax credit benefits you may be missing.