Amending Prior Year Returns to Maximize R&D Tax Claim

2 Minute Read
Posted by Brad Mols on May 10, 2019 8:25:00 AM

Has your business missed out on the capital-infusing opportunities offered by the research and development tax credit, simply because you weren't aware that some of your activities may qualify for tax credits? It's a common (and unfortunate) occurrence for companies in virtually every vertical. Each year, countless business owners miss out on this dollar-for-dollar reduction in both local and federal tax liability because they didn't realize that the innovation tax credit covers far more than science laboratories and software design. This robust tax incentive spans over 40 industries and covers a multitude of operations, making it one of the most lucrative programs for businesses of every size and scope.

You May Still Be Able to Leverage Cash Savings Potential of the Innovation Tax Credit

If you've recently discovered that your company could, in fact, qualify for the research and development tax program, there is some good news. Even though you've technically missed this year's deadline, you may still be able to tap into the cash saving potential offered through the R&D tax credit. In 2014, the IRS published new, temporary regulations that change how taxpayers file for and maximize possible research and development tax benefits. Finalized in February 2015, the updated legislation officially allows business owners to go back to previous tax years and claim available innovation credits using the alternative simplified credit (ASC) method.

What You Need to Know About Amending Your Previous Tax Returns

Yes, the recently updated IRS regulations ease taxpayer burden when retroactively amending research and development claims. However, there are still some stipulations to keep in mind when navigating through the process. First, it's important to know that the current regulations mandate that any taxpayer who has previously claimed a credit for a specific tax year may not elect to amend with the ASC method for that same tax year. Additionally, the revisions made to Section 41 of the Internal Revenue Code stipulates that taxpayers who are also members of a controlled group in a designated tax year are ineligible to leverage an ASC election on an amended return if any member of the controlled group previously claimed the innovation tax credit using a method other than ASC for that tax year.

The amendment process does have time restrictions put on it as well. On the federal level, a business has up to three years to amend its earlier returns to take advantage of the cash benefits offered through the innovation tax credit. At the local level, every state has its own rules and regulations, with some states allowing companies to amend its returns going back even further than three years.

Partner With a Qualified R&D Tax Credit Professional

If you're considering amending your previous tax returns to adjust for research and development benefits, it's crucial to partner with a professional firm that specializes in innovation tax regulations. A provider fully dedicated to R&D credits can help your business both understand its legal obligations as well as optimize benefits for any given year. A qualified team will walk you through the ACS election process, providing invaluable insight on several key components, such as:

  • Current local and state legislation
  • All qualifying activities
  • Proper supporting documents

From outlining necessary filing steps, to systematically running individual projects through the program's Four-Part Test to evaluate each project against the program’s requirements, collaborating with an R&D financial specialist will equip you with the resources needed to increase your organization's profit margins and ultimate return on investment.

Contact Acena Consulting for more information on amending tax returns from previous years today.


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