Why the Tax Extension Makes Now a Good Time for an R&D Tax Audit

3 Minute Read
Posted by Randy Eickhoff on Apr 14, 2020 8:54:33 AM

The federal government has recently implemented a diverse range of financial resources for business owners struggling to maintain their operations in the wake of the COVID-19 disruption. One of the biggest changes? Extending the April 15 filing deadline until July 15.

What is Your Corporate Approach to the New Tax Deadline?

Taxpayers who haven’t filed yet have met the extension with two distinctive, very different schools of thought. Some continued on with a “business as usual” approach, keeping their virtual appointments with their accountants and filing for the original April 15 deadline. Others, grateful for the slight reprieve among the current economic disruption so many are facing, shoved their gathered tax documents completely out of sight for the next ninety days.

At Acena Consulting, we recommend a third option for business owners with companies that have operations that could potentially qualify for research and development activities. Reschedule your appointment with your tax accountant. However, instead of ignoring the tax process until June this year, take this extra time to find out if your organization is eligible for the R&D tax credit for 2019.


Understand the Benefits of the Innovation Tax Credit

Over the last several years, the R&D tax credit has undergone significant legislative changes, making it accessible to businesses of every size and across every industry. Still, many small enterprises miss out on the rewards of this program simply because they don't realize that their business qualifies for the credit. 

Is the research and development tax credit worth your time during this extended tax season? Understanding some of the program's many benefits can help you make an informed decision. Some of the more significant advantages of the research and development tax incentive include:

Reduce Overall Tax Burden

Claiming the R&D tax credit for qualifying research activities can instantly reduce both your federal and state tax liability. It's important to note that although not every state offers the credit, most do. Additionally, every state has its own specific rules and regulations that taxpayers must adhere to when filing. 

Drive Bottom-Line Profits

Beyond reducing the tax burden, the research and development benefit can help companies protect profit margins on their operations. Each year, business owners across multiple industries use the program to drive an influx of cash flow into their organization. This money can be used to maintain working capital or to reinvest in the business for growth and expansion. 

Increase Business Innovation

The R&D tax credit program was explicitly designed to encourage organizations to create, repurpose, and leverage technology within the organization. Being rewarded for innovation increases a company's motivation to continue using technology and may even help some businesses to future-proof their operations. 

Remain Competitive in Industry

Even in a healthy economy, business owners can use the R&D tax credit to maintain their competitive edge within the marketplace. However, during times of disruption and potential financial crisis, the research and development program can infuse a business with the capital needed to help it retain its industry presence.


Is Your Business Eligible for the R&D Tax Credit?

The tax extension gives businesses more time to evaluate qualifying research and development projects, investments, and eligibility. Acena Consulting can help. Contact us today to schedule an appointment to discuss your existing operations.


Randy Eickhoff

Randy Eickhoff

Acena Consulting President Randy Eickhoff, licensed CPA, has partnered with more than 200 companies during more than 20 years of experience securing tax credits and other government incentives. His corporate partners range from multinational technology firms to smaller, privately held manufacturing, sports, and technology enterprises.