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Industry News
Firm to help composites companies get RD tax credits

Affluent Consulting is helping composites companies take full advantage of federal and state research and development tax credits.

Author:
Posted on: 11/13/2007
Source: CompositesWorld

Affluent Consulting (Odessa, Fla.) is focusing its expertise in helping companies take advantage of federal and state research and development (R&D) tax credits on the U.S.composites industry.

After Affluent Consulting personnel attended the recent COMPOSITES & POLYCON show in Tampa, Fla., the company recognized the potential tax savings for which many composites businesses are eligible, but may be failing to take advantage of. Affluent works with companies such as composites fabricators and suppliers to the industry to help them recover research and development expenditures. "Through our diligence and commitment, we find and document costs that are very often missed by many CPA firms,"said Stephfan Nurse of Affluent Consulting.

Through intimate knowledge of the Internal Revenue Code and careful examination of treatises, case law, regulations, and rulings, Affluent Consulting professionals will help U.S. composites industry companies uncover and capture all qualifying research.

The Federal R&D Tax Credit Program has been in existence since 1981, but was utilized by only the most technologically sophisticated companies until 2001. That year, U.S. tax laws were redefined to create lucrative new incentives for companies who continued to innovate, allowing a much greater number of companies to qualify for the R&D tax credit. Nearly seven years later, most eligible companies still do not take full advantage of this opportunity and continue to pay billions of dollars to the U.S. government even though their R&D efforts qualify them for these substantial, annual credits.

Nurse says the roadblocks to claiming these R&D tax credits are lack of awareness and the time required to document a company's eligibility for them. "Many companies fail to take advantage of the R&D tax credit because of ambiguous and difficult to interpret statutory and regulatory descriptions of what R&D is,"he explains. "In the tax world, R&D is defined much more broadly than in the world of science. Qualifying research includes much more than just new product development. Expenditures taken to improve existing products as well as to develop or improve processes also qualify. Basically, a company's day to day operations may qualify them for this benefit.”

The experts at Affluent Consulting conduct thorough R&D tax credit studies for clients utilizing a four-phased approach: • Phase 1 – Preliminary Identification • Phase 2 – Qualitative Assessment • Phase 3 – Quantitative Assessment • Phase 4 – Reporting

Nurse points out that fabricators and suppliers should also note that the typical R&D Tax Credit studies Affluent Consulting performs are retroactive for up to four tax years, in accordance with U.S. tax laws. "Because our studies are retroactive for multiple years, they can result in a tax credit for our clients in excess of six figures,"Nurse says.

Affluent Consulting is offering composites suppliers and fabricators free, no obligation consultations as it begins serving the industry. During this preliminary assessment, the goal is to determine if there are any activities conducted by composites companies that qualify as R&D as defined by the Internal Revenue Code. After Affluent Consulting ascertains that certain activities qualify, they determine a realistic tax credit estimate based on high-level information provided by client companies. Only after the preliminary consultation and client approval does Affluent continue with an R&D tax credit study.

Due to the strong emphasis on innovation through research and development within the composites industry, there are many activities and expenditures which will qualify companies for the R&D tax credit. Among these activities some examples include: • Process Improvements developed for fabrication techniques; • Custom or "In-House"Software Development specific to a company's internal needs; • New Materials Evaluation & Selection including resins, gel coats, reinforcements and more; • Physical Testing to evaluate composite part performance in end-user applications.

The final aspect of the reporting phase includes preparation of the required amended federal income tax returns and the R&D study which serves as documentation supporting the R&D tax credits claimed. The financial benefits of conducting R&D tax credit studies are immense and may include: • Significant Federal Tax Credits from the US Government • Additional Tax Savings in Future Years • Increased Cash Flow for Companies • Lower Effective Tax Rates • Obtaining a Methodology for use in Future Years to Secure Potential R&D Tax Credits

Nurse says over $8 billion in R&D tax credits are awarded annually to qualified companies in the United States. Yet,the IRS estimates that a mere 20 percent of companies who qualify have taken advantage of this program which was designed to encourage innovation. Working with Affluent Consulting is a no-lose proposition. "We work on contingency based on the amount of qualifying expenditures we identify for clients,"Nurse explains. "Composites companies can only gain from talking to us.”

For more information on the Federal R&D Tax Credit Program or to schedule a free consultation, contact Affluent Consulting at (813) 486-9492 or info@affluent-consulting.com.

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