Skip to main content
Tax Credits

Three-pronged Approach to R&D Tax Credit Claims

By December 8, 2022No Comments
DST's Three-pronged Approach to R&D Tax Credit Claims

What is our three-pronged approach to R&D Tax Credit claims? No matter what the industry or experience, when we bring in complementary disciplines and work together to build off each other’s strengths, we end up with a solid end product.  Imagine a breaking story being reported on.  The top investigative reporter does a great job with interviewing witnesses and getting people to tell their side of the story.  Then the copy editor will make sure that the story flows in a logical order so that the reader can feel the emotions and intensity of the story as if they were there.  The publisher brings the relevant stories to the demographics of the audience and understands what’s important to them.  All three work together to build a strong newspaper that should consistently offer exceptional reading for their community.     

It’s important to use a similar approach when conducting your Research Tax Credit RTC study.  Utilizing the strengths of Tax Engineers, Tax Associates and Tax Attorneys, in each of their unique disciplines, builds amazing core strengths in the technical, financial and legal aspects of the RTC study. 

The skills of Tax Engineers enable productive peer-to-peer discussions with the technical members of the taxpayer’s team. They ask in-depth questions based on a fulsome understanding of the underlying scientific and engineering principles being applied.  Tax Engineers with industry experience can be efficient and guide the conversation or technical interviews to uncover additional qualified research activities and ensure adequate documentation is identified to substantiate claims. At the same time, they identify what documents are available to support the 4-Part Test and understand how aspects of the scientific or engineering process can support qualification. This ensures an efficient collection of contemporaneous documentation that doesn’t require in-depth explanation. Tax Engineers act as the investigative reporters to get to the facts of what qualified research activities exist as recounted by the taxpayer’s subject matter experts (SMEs) and present the information in a format that is aligned with Section 41 of the I.R.C.  

In addition, Tax Engineers can assess the taxpayer’s existing process and offer recommendations for a more robust real-time tracking system, without being overly burdensome on the Taxpayer’s team. Since they come from industry, they are ideally positioned to understand what will work and be easily integrated and acceptable within various industries, and what would be seen as ‘extra paperwork’.  

Tax Associates link those QRAs to the expenses provided by the taxpayer’s financial and tax teams.  They can review the detailed expense accounts, look for trends, and ‘talk the talk’ with respect to accounting principles and cost accounting practices.  Our CPAs can interact and answer questions about how the credit and form integrates into the tax return itself, and make sure that all accounting and tax practices are followed.  In addition, our Tax Associates look for efficiencies and offer recommendations where processes can be improved for better tracking of QREs for more real-time tracking to improve the nexus of QRAs to QREs. 

Finally, our Tax Attorneys keep everyone aligned with the latest changes in regulations, legislative updates, and any recent case law findings.  They are ‘the publishers’ that make sure our studies are geared toward the audience that will accept the research activities and associated expenses as qualified and credible with the supporting contemporaneous documentation presented. This team ensures that the taxpayer’s facts are presented in such a way that the ‘reader’ (or authority conducting a potential exam) can follow the story to see how they are aligned to the law.  The study’s goal is to maximize credits, to ensure that the claim is legitimate and defensible, and to ensure that the taxpayer can get their entitled amounts. 

DST’s Tax Engineers, Tax Associates and Tax Attorneys work together in a three-pronged approach to maximize efficiency for our taxpayers, and ensure that our clients’ R&D studies are fully protected and substantiated in the event of any review. This combination allows us to find more qualifying expenses and to support claims with documentation and guidance to withstand scrutiny.

Learn how the three-pronged approach could work for your business by getting in-touch with one of our Tax Experts today!