Tax Relief may still available for Innovative Businesses

For many businesses, the September 15th tax filing deadline can be frightful.

It’s a time when business owners and their financial teams determine the final income tax amount that will be owed to the federal government.

So what are businesses to do when their CPA provides the dreadful news that the final bill owed exceeded estimates? Some simply pay the bill and move forward by adjusting next year’s budget. But others know that even though their return has been filed, there may still be government incentives available that may allow them to recoup paid taxes and reduce subsequent annual tax liability. For example, if your business is developing new or improved products or processes, the Research & Development Tax Credit may be utilized to claim a refund on previously filed returns, and be incorporated into future tax planning.

The R&D Tax Credit is a government incentive that was enacted in 1981 as a temporary provision and a means to help innovative U.S. businesses stay globally competitive. Today, it’s a permanent part of the U.S. tax code and has seen recent favorable legislation/regulation broadening its scope, and the opportunity for many more businesses to claim it. (While businesses do need to meet specific requirements to qualify for this credit, most R&D related to developing new or improved products and processes can fall within the broad spectrum of credit eligibility.)

If your business is deemed eligible, generally you will have at least 3 years from the date you filed your tax return (or from the statutory due date if the return was filed early) to claim the credit via an amended return. This means you may actually be able to regain funds paid from 2015, 2014, and 2013 to the federal government.

In addition, many states also offer an R&D tax credit incentive, and many follow the same eligibility rules as outlined by the federal credit. This means that if your business qualifies for the federal credit, there is a chance you may also qualify for state tax savings. Like the federal credit, many states also allow for claims to be submitted for prior years via an amended return.

Ultimately, if your federal return refund claim is approved and granted by the IRS, you will receive a refund check including any applicable interest on the overpayment. If approved, most state return refund claims will also include interest on the overpayment.

To learn if your business is eligible for tax relief through the Federal R&D tax credit or through state R&D tax credits, contact Tax Credits Group today at

About the Author: Bethany Jones-Worner

Bethany Jones-Worner is Managing Director of TCG. With a decade of experience in specialized Research and Development Tax Credit consulting, she’s helped her clients in the banking, software and manufacturing industries save millions.