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Case Study

CASE STUDY: Synchronizing Synergy – Strategic Partnership in R&D Tax Credit Optimization

Strategic Partnership in R&D Tax Credit Optimization

CASE STUDY: Synchronizing Synergy – Strategic Partnership in R&D Tax Credit Optimization

R&D Tax Credit Case Study: In the intricate landscape of R&D tax credits, a major technology corporation embarked on a transformative journey with a specialized tax consultancy, aiming to overhaul their traditional approach to claiming R&D incentives. This partnership was pivotal in shifting from outdated questionnaire methods to a more dynamic, business component methodology, emphasizing direct engagements with Subject Matter Experts (SMEs).

Transition from Questionnaires to Business Component Methodology 

The initial collaboration addressed the limitations of the traditional questionnaire approach, which often resulted in incomplete and inaccurate R&D documentation. The strategic move to a business component methodology, well ahead of the IRS’s anticipated new Form 6765, enabled a more structured and efficient documentation process, providing a solid foundation for accurate tax credit calculations.

Enhanced Engagement through Direct Interactions 

The consultancy facilitated a system of direct, face-to-face engagements with SMEs, allowing for a deeper understanding of R&D processes. Tax Engineers from the consultancy captured detailed insights into each project, significantly improving the documentation’s accuracy and comprehensiveness.

Specialized Team’s Role 

At the core of this strategic shift was the consultancy’s team of Research Tax Credit professionals, whose expertise in R&D tax credit nuances brought precision and empowered the taxpayers to navigate compliance complexities confidently. This team’s deep industry experience ensured a tailored approach, aligning with the specific needs and challenges of the corporations.

Compliance and Operational Efficiency 

The collaboration aimed to achieve unwavering compliance with R&D tax credit requirements while optimizing the corporations’ operational efficiency. Abandoning the one-size-fits-all questionnaire model for a tailored, interactive approach enabled the corporations to meet tax credit compliance demands effectively and utilize their internal resources efficiently.

The Evolution of Partnership 

The journey from a traditional advisory role to a strategic partnership highlighted the consultancy’s role in aiding corporations to navigate R&D tax credit complexities, demonstrating specialized knowledge and proactive approaches. This evolution facilitated a more efficient and accurate tax credit claiming process, resulting in improved documentation quality and a deeper understanding of R&D activities.

Proactive Engagement Model 

The consultancy’s proactive engagement model replaced ineffective questionnaires with direct interactions, prioritizing face-to-face meetings with SMEs. This shift ensured relevant, specific, and comprehensive data collection, covering all aspects of R&D projects and expenditures. Such hands-on approach led to a more accurate recording of R&D activities, enhancing the robustness of tax credit claims and making them more defensible during audits.

Technology Sector Case Study 

A technology sector client’s positive experience with the consultancy underscored the benefits of moving to a business component methodology and direct SME engagements. This approach allowed for more precise R&D expense tracking and structured documentation, aligning with stringent tax credit standards.

R&D TAX CREDIT CASE STUDY: Seamless Integration and Strategic Success: DST Advisory Group and CLIENT X

The taxpayer, CLIENT X, submitted a case study highlighting the success of their R&D tax credit study and the collaborative relationship with DST, where DST was referred to as an integral and transparent part of their Tax Team. This exemplifies the ultimate goal of a strategic partnership: to integrate so fully into a company that the consultancy becomes an extension of the tax team, bridging seamlessly to the operations and R&D groups.

  1. Background and Initial Challenges CLIENT X, originally an importer and distributor, evolved to focus on U.S.-based manufacturing and R&D many years ago. This shift presented challenges in data gathering for R&D tax credits. “For most of its history, CLIENT X… acted as an importer and distributor… It wasn’t until the 21st century that the client acquired a portfolio of companies that conducted significant product research and development here in the U.S.”  Initially, the tax department aimed to gather necessary information using a standard questionnaire and workbook distributed across the company. However, this method was soon deemed unfeasible as creating a one-size-fits-all workbook to adequately address the diverse range of business units proved to be too cumbersome for the staff at the subsidiaries to complete effectively.
  2. Adoption of Business Component Methodology The shift to a business component methodology marked a significant change, moving away from ineffective questionnaires to a more structured approach for documenting R&D activities. CLIENT X worked with DST to ensure that their accounting systems could provide data on a project basis, establishing “separate cost centers for each project.”
  3. Time-Tracking Systems Implementation Recognizing the importance of contemporaneous documentation, CLIENT X, aided by DST, implemented or improved time-tracking systems across its subsidiaries, ensuring accurate recording of employee involvement in R&D.
  4. Direct Interviews with SMEs Opting for personal interviews over data collection through questionnaires, DST facilitated deeper insights into R&D projects. CLIENT X’s tax team, by interviewing SMEs directly, gained detailed understanding and documentation of R&D activities, enhancing the accuracy of their tax credit claims.
  5. Building Rapport for Future Collaborations The initial engagement between CLIENT X’s tax team and the R&D groups was crucial in establishing a rapport that would benefit future data gathering. “The team found that most of the R&D staff were excited to talk about the projects in which they were engaged.” Informing each subsidiary of their tax credit contributions enhanced the R&D teams’ understanding of their financial impact, fostering a strong, evolving relationship between the R&D and Tax departments. 
  6. Comprehensive Documentation Strategy The collaboration resulted in a thorough documentation process, categorizing R&D activities into product and process improvements. This structured approach was vital for capturing the full scope of qualifying R&D expenditures.
  7. Broader Tax Implications Beyond R&D tax credits, the partnership helped identify other tax-related opportunities and liabilities, showcasing the comprehensive value of the strategic partnership between DST and CLIENT X.

Conclusion: Integration as a Strategic Partner The case study demonstrates the success of integrating DST Advisory Group as a strategic partner, becoming an essential part of CLIENT X’s tax team. This seamless extension into the company has fostered a productive and mutually beneficial relationship, enhancing the R&D tax credit process and supporting broader tax strategies.

This case study illustrates the depth of integration and the strategic success achieved through the partnership between DST and CLIENT X, highlighting the seamless collaboration and the significant impact on the R&D tax credit process and broader tax planning activities.

Maximizing Compliance and Documentation 

The strategy focused on detailed, hands-on assessments of R&D activities, ensuring comprehensive documentation and compliance with IRS standards. This meticulous approach to R&D tax credit documentation underlined the importance of establishing a clear nexus between R&D activities and expenditures, minimizing audit discrepancies.

Educational Empowerment and Collaboration 

The educational sessions for SMEs played a crucial role in demystifying the R&D tax credit process, enhancing the understanding and accurate documentation of R&D activities. This collaborative and educational approach fostered a culture of continuous learning and improvement, optimizing the tax credit claiming process.

Audit Readiness and Expert Preparation 

Preparing SMEs for IRS examinations involved detailed training sessions and building a robust audit support system. This preparation ensured a well-coordinated defense of tax credit claims, highlighting the consultancy’s effectiveness in facilitating structured and successful audit processes.


This case study illustrates the significant evolution in the R&D tax credit claiming process that we at DST have pioneered, moving from traditional questionnaire-based methods to a more effective, compliant, and collaborative approach. Our direct, face-to-face engagements with Subject Matter Experts (SMEs) and the adoption of a business component methodology have profoundly enhanced the accuracy and completeness of tax credit claims. This strategy has not only laid a robust foundation for defending audits but also emphasized the strategic importance of our expert support and meticulous preparation.

What distinguishes DST Advisory Group is our ability to combine technical expertise with personalized service, ensuring that we meet each client’s specific needs and challenges with precision and care. Our team of seasoned professionals has a deep understanding of the intricate R&D tax credit landscape, enabling us to navigate complex regulations and maximize benefits. Our proactive, hands-on approach fosters a culture of trust and cooperation, facilitating seamless integration into our clients’ operations and promoting a synergistic relationship between their tax and R&D departments.

Moreover, our commitment to continuous learning and adaptation to changing tax laws means that our strategies are not only up-to-date but also forward-thinking, preparing us and our clients for future trends and requirements. This proactive stance, coupled with our dedication to client education and empowerment, establishes DST Advisory Group as an invaluable partner in the R&D tax credit process. It distinguishes us in the field of tax consultancy and solidifies our reputation for excellence and reliability in delivering optimized tax credit outcomes.