by Michael J. Devereux II, Mueller Prost
On June 3, 2014, the US Treasury proposed regulations indicating that the IRS will now begin allowing taxpayers to claim the Alternative Simplified Credit (ASC) on amended tax returns if the taxpayer had not claimed the research credit on its original tax return. For taxpayers not claiming the credit in prior years, this development can mean significant savings.
The R&D tax credit is meant to encourage taxpayers to increase their research activities. As such, taxpayers must exceed a base amount in order to qualify for the tax credit. Two methods exist: the traditional method and the ASC. The ASC method allows utilization of more recent documentation that may be more readily available than what was previously required. Before these new regulations, taxpayers that amended their return to claim the credit may have been required to rely on information from 1984-1988 to claim the R&E Tax Credit.
About the R&D tax credit
The R&D tax credit is one of the most under-utilized tax savings opportunities for companies in the plastics industry. The R&D tax credit rewards companies who invest resources in innovation, product development, mold design, new materials or resins, and process development/improvement. In addition to Federal tax savings, over 30 states have a similar program that rewards companies for the development or improvement to its products or processes.
Michael J. Devereux II, CPA, is a partner and director of manufacturing and distribution services at Mueller Prost, a CPA and Business Advisory firm. His primary focus is on tax incentives available to manufacturers. Mueller Prost’s Tax Incentives Group is nationally recognized and has assisted hundreds of companies in the manufacturing sector to identify and utilize these incentives. Mueller Prost is a member of MAPP and offers MAPP members three hours of complimentary tax and accounting advice. For more information, call 314.862.2070 or email mdevereux@muellerprost.com.