The Research and Development Tax Credit was created by Congress in 1981 as a way to help companies in the United States stay competitive within the global marketplace. The PATH Act (Protecting Americans from Tax Hikes Act) officially made the R&D Tax Credit permanent on December 18, 2015.  The PATH…

A company is able to obtain benefits from the Research and Development Tax Credit as long as they have Qualified Research Expenses (QREs). Qualifying Expenses The IRS defines Qualified Research Expenses (QREs) as the sum of “in-house research expenses” and “contract research expenses”. Those expenses include: Wages: Taxable or subject…

Qualified Research Activities (QRA) are an integral part of obtaining the Research and Development Tax Credit. In order for your company to optimize its R&D credits, it must have qualifying activities taking place within its business process. Qualifying Activities For an activity to qualify as a qualified research activity (QRA)…

IRS regulations state that “a taxpayer must retain records in sufficient usable form and detail to substantiate that the expenditures claimed are eligible for the credit.” The taxpayer has to fully comply with this regulation when collecting all the information needed for an audit.  The IRS states that if a…

For a company’s activities to meet the requirement to be considered qualified research activities (QRAs) it has to fulfill the “IRS Four-Part Test”. The “IRS Four-Part Test” has four requisites: New or Improved Business Component: The QRAs must result in a new or improved level of function, performance, reliability or…

The IRS defines Qualified Research Expenses (QREs) as the sum of “in-house research expenses” and “contract research expenses”. Those in-house research expenses include: Wages – Taxable or subject to self-employment tax of individuals performing, directly supervising or supporting the qualified research. Supplies – Amount paid or incurred for materials used…