The Research and Development (R&D) Tax Credit was made permanent in December 18, 2015. There are new and enhanced provisions for companies of all sizes, making the incentive more significant than ever before. This is especially important for companies in the waste management industry which constantly come up with new process developments and testing to treat the unwanted waste.
Since many of these activities take place outside R&D laboratories, business owners are unaware that they can take advantage of such valuable tax incentives. As long as the IRS Four-Part Test is fulfilled, it doesn’t matter how informal the setting where the qualified research activities (QRAs) are created. Moreover, waste management company owners can also claim the qualified research expenses (QREs) for the R&D Tax Credit. These are the wages paid to their employees and contractors for qualified research that they’ve completed within the tax year that’s being claimed. Additionally, any supplies used to conduct the QRAS would also be eligible as part of the QREs for the R&D tax incentive.
The following list details several QRAs that can be claimed as part of the R&D Tax Credit:
- Improving contamination control systems.
- Developing or improving compost screening systems.
- Testing new recycling, disposal, and treatment methods.
- Developing and improving odor control and reduction methods.
- Modifying waste management machinery and equipment to increase efficiency.
- Creating and improving waste material recovery methods.
Does your company perform any of these waste management activities?