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Axiom Solutions Helps Businesses Get the R&D Credit They Deserve in the New Year
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| Copyright: | PR Newswire | | Source: | PR Newswire | | Wordcount: | 683 |
DENVER, Dec. 13 /PRNewswire/ -- As businesses near the end of their fiscal
year, they should consider recent changes in the federal R&D Tax Credit laws
that may apply to their day-to-day business activities. Congress voted on
December 9 to pass H.R. 6111 to enhance and extend the R&D tax credit through
the end of 2007. Businesses not taking advantage of the R&D tax credit may
regret leaving significant money on the table.
(Logo: http://www.newscom.com/cgi-bin/prnh/20061213/LAW002LOGO)
The R&D credit encourages investment that over the long term can lead to
the development of new, more cost-effective, and more efficient products and
services. Before 2001, these tax credits primarily benefited Fortune 500
companies, but now apply to a broad range of small to medium sized businesses,
primarily in the manufacturing, engineering, architectural, medical science
and information services industries.
While middle market companies constitute a significant percentage of
businesses registered in the United States, they account for a
disproportionately smaller percent of R&D tax credit claims. Research and
development expenses typically account for a larger percentage against net
sales in smaller companies; the impact of the credit may therefore be
significantly greater for their bottom line.
Business may qualify for credits for activities that historically have
been considered simply as "the cost of doing business." The credit applies
not only to product development efforts, but also to business process
improvements. Examples of a company's activities that qualify for the credit
include efforts to make new, lighter, stronger, cheaper and more reliable
products, or development of more precise, economical or versatile processes.
These credits apply not only to the current tax year, but can also
generate significant refunds of previously paid federal income taxes for open
tax years.
"Axiom identified a significant tax savings which we were able to reapply
to our business growth efforts," said Vince Forgione, a tax accountant for
Snyder's of Hanover, an Axiom client in the food manufacturing industry. "The
credit boosted our bottom line significantly in 2006 and we can continue
evaluating our eligibility for future filings as well."
Research and development expenses as a share of net sales varies
significantly from industry to industry, but typically range from 5% to over
35% for the companies most eligible for these credits.
The Internal Revenue Service considers four key criteria for business
activities to qualify for the R&D tax credits:
* Research that intends to eliminate uncertainty * Uses a process of experimentation to remove uncertainty * The activity must be technological in nature * It must relate to a new or improved function of a process or product
"It's important for businesses to check their eligibility for the R&D
credit. It's never too soon to evaluate whether the credit applies to a
particular business," stated Larry Nealy, Managing Partner of Axiom Solutions.
"No two companies are alike, which is why our expertise and methodology
effectively apply the requisite focus to identify which specific business
activities qualify for the credit."
The credit a business can receive depends largely on the amount of
qualified R&D costs incurred by the business, such as wages, materials and
supplies, and contracted research expenses. Like many other areas of tax law,
the definition of qualified R&D expenses is not always clear. Factoring the
numbers can challenge even the most sophisticated businesses and their CPA
firms, creating the demand for more specialized tax credit services firms such
as Axiom.
Tax credits also offer businesses a new avenue for better financial
planning and saving money in the years ahead. The immediate recovery of
credits for current and open tax years may boost the bottom line for the
current tax year, but cumulative future savings can provide longer term
benefit through improved project and process management of credit related
details.
Axiom Solutions is a leading Research and Development Tax Credit services
firm headquartered in Denver, CO with offices in fifteen other cities
nationwide. Founded in 1996, Axiom has helped hundreds of companies recover
millions of dollars in R&D tax credits. For more information on Axiom
Solutions, please visit www.axiomsolutions.com
SOURCE Axiom Solutions
CONTACT: Nick Kromenacker of Axiom Solutions, +1-303-758-7130, ext. 1010, nickk@axiomsolutions.com
This is a news service of Thomson Business Intelligence Service ©2006. This content is for your personal use only, subject to Terms and Conditions. No redistribution allowed.
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