For many large businesses, claiming the R&D tax credit provides significant funding that can be re-injected into the continuous improvement of products and processes or have a significant impact on a company’s results.
However, the possibility of being audited, which can be demanding both in terms of time and resources can create a hindrance for those looking to file a claim. Not only is the outcome of an audit uncertain (as jurisprudence constantly evolves) but audits can occur up to 3 years after filing or amending a claim. For companies lacking experience with the audit process, it can therefore be difficult to defend a claim without the proper support.
So, what if audits no longer had to be part of the R&D tax credit process?
No, you aren’t dreaming. To provide companies with assets greater than $10 million with a simplified process for determining the amount of QREs (qualified research expenses) they can claim, the IRS Large Business and International Division (LB&I) has released a directive that streamlines the claims process for both the taxpayer and the IRS.