179D Update: Date to Watch

Over the last few months, there has been an expectation of the Democratic Party to be preparing a green energy tax bill that should guarantee a renewal or extension of specific tax incentives likes the 179D. House Democratic tax writers have claimed that the final touches are in the works, and those following along this journey with us should keep a close watch on the date 11/21/19. 

Staff for Senate Finance Chairman Chuck Grassley has been a known advocate for the energy incentives. The Republicans were briefed on Tuesday morning by him with some potential updates. While he has not publicly announced any details due to current negotiations, it should be noted that he has been continuously requesting that the tax incentives that expired at the end of 2017, be renewed or extended. 

Only time will tell, but National Tax Group is continuing to keep a close watch on the incentives. Keep checking back with us for the latest news and updates on the life of these incentives.

Contractors, Engineers, and Architects Rejoice

Close-up of hands of beautiful young designer person wearing suit using drawing compass on drafts. Attractive model working at office desk with blueprints for new project. Interior shot

New IRS regulations making it easier and more profitable to file for R&D tax credits

Earlier in June, the IRS provided new guidelines that are now allowing companies to use a streamlined method of filing for R&D tax credits. This new method is currently available for amended tax returns in addition to initially filed tax returns. This is excellent news for architects, engineers, and contractors because it accounts for larger projects that include or require a unique design or solution. The new regulations also allow businesses to use their qualified expense results rather than receipts to calculate their minimum spend amount before they can take advantage of the credit. 

These new regulations allow for an increase in cash flow and fewer headaches during the process of filing for your R&D tax credit. This means that more businesses than ever will be able to take advantage of the credit due to the fact that they no longer need to provide those gross receipts. In the past, for architects, engineers, and contractors, this was a significant hindrance that kept them from being able to file correctly or efficiently. 

Do I Qualify? 

While technically any business that participates in research and development activities, qualifies. However, engineering and architecture firms have the advantage with these new policies because many of their qualifiers are found in day-to-day business tasks that are now easy to write off. Contractors and designers who require unique engineering in the realm of electrical, mechanical, HVAC, environmental, roadway, and specialty work also qualify. 

The typical activities that these businesses can claim are the experimentation and/or analysis of new methods, formulas, and techniques in their line of work. This can include but is not limited to: building information modeling (BIM) and 2D and 3D modeling to general engineering. Or any activity that has a goal of investing or improving upon a current method, formula, and technique. 

You Can Get Just How Much? 

Before the regulation change, many businesses would need to go through hours of research and paperwork to claim the credits they were eligible for. With the new rules and simplified methods, claiming your credit is easier than ever. Not to mention, there is a statute of limitations on every qualifying job, up to three years. This means if your business missed out in the past, it’s not too late! Your business could be claiming wages, non-property materials, and many more items. 

The NTG Difference

National Tax Group is a collective group of tax professionals who have seen it all and have experience in multiple sectors. We save our clients millions each year from missed opportunities. National Tax Group assists companies of all sizes and industries in obtaining R&D credits by providing reliable documentation that will withstand any level of IRS and state authority scrutiny, even under these new rules. Give us a call at (561) 257-3436 to make the most out of your work today.  

179D Update: Verdict Still in Review, but Hopeful.

Verdict Still in Review, but Hopeful. 

Things are brewing in Congress this week as there continue to be discussions surrounding the expired tax credits and incentives. National Tax Group has been keeping a close eye on the progress of these incentives.

It was revealed last month that there would most likely be a tax extender package that should include 45L and 179D. While it still remains unclear whether this tax extender package will come to fruition, it may break the cycle of continuously extending the bills time after time, once they come up for expiration.

While some of the Finance Committee are eager to work up an extender package, it was hinted at in September that the Democrats plan on offering amendments that will be aimed at the 2017 GOP tax overhaul.

It is also up for debate whether an extenders package will be beneficial to the budgeting rules set in place. While some believe the current political stirrings in the white house will affect the outcome of these questions, many remain confident that the tax extender package will happen without getting pushed aside.

National Tax Group is continuing to monitor the progress of these extenders closely, so be sure to check back here for more updates until the Senate reaches a final verdict.

What to Look for in a Cost Segregation Advisor

Because the difference between a good and bad cost segregation advisor could cost you millions

Finding a Cost Segregation Advisor can be challenging, especially if you do not know what to look for. To ensure that no steps are missed and no mistakes made, it is essential to partner with the right advisor who will help you accurately maximize results. National Tax Group knows that we are the best of the best, but don’t take our word for it. If you follow these three general guidelines, you’ll see that we excel in all of these areas.

Experience in Multiple Sectors

When it comes to selecting a Cost Segregation Advisor, it is crucial to ensure that your candidate has experience in multiple sectors in the economy. This goes beyond just expertise in each industry. There are four different sectors in every economy, so it is important that your advisor has a strong understanding and portfolio that showcases management in all of those sectors.

Has a Proven Track Record

Reputable advisors must be able to prove their value through examples of their success. Don’t be afraid to ask for proof of past success stories and references from their clients. Any firm that can’t provide these sources should not be permitted to handle such a large transaction for you.

Utilizes an Engineering-Based Approach

A quality cost segregation advisor will conduct a study that is based on a detailed engineering-based analysis. This analysis should involve a thorough review of relevant information such as cost data, building plans, and lease agreements, as well as an on-site inspection of the property conducted by a qualified professional, preferably an engineer.

When you work with us for your Cost Segregation Study needs, you can rest assured that you are receiving the maximum tax benefits possible. To talk to one of our specialists to find out more, give us a call at (561) 257-3436.

179D Update: Tax Legislative Agenda for the Remainder of 2019

In the last few months, the outcome of expired energy tax provisions has remained unknown. Congress has resumed its session after the August recess and there is still a possibility of tax legislation before the end of the year. There are many items that have been observed by the House of Representatives and the Senate and are likely to be included in a potential tax package. This package could extend the life of many important energy-efficiency bills that support businesses. However, there are also several issues that could occur as well.

The House and Senate have flirted with several proposals given to them to resolve or postpone this process:

  • Once again, temporarily extending the 30-plus bills that are expired or expiring at the end of 2019 through 2020 to be revisited. 
  • Disaster relief
  • Retirement savings 
  • A Tax Cuts and Job Act provisions adjustment that relates to the Kiddie Tax on the children of households that qualify to be Gold Star Families
  • The agenda could be delayed by the impeachment inquiry led by the Democrats 

National Tax Group will continue to be monitoring the status and updates of these tax provisions. As experts in these specialized areas of the tax code, we are prepared to help all taxpayers obtain their incentives once they are able to again. Contact one of our team members to learn about the expired tax provisions and the benefits they will bring you.

Tax Incentive Extenders: Deadline Approaching

Oct 1 is the deadline for the new fiscal year, which means some changes may be coming for tax incentives that are expiring or expired. This year is crucial due to the potential need to raise or suspend the spending caps. These caps affect our national debt to avoid detrimental cuts looming over the defense and nondefense programs. This deadline can give legislators the opening to, once again, add extenders to bills that are vital to keeping the government moving. 

Two of the incentives National Tax Group is paying attention to are the Internal Revenue Code Section 179D and Section 45L. 179D is an incentive for commercial and residential buildings of at least four stories to implement energy-efficient improvements. The second is 45L, a $2,000 credit for qualifying homes of three stories or less that were given based on energy-efficient upgrades. The incentives lapsed at the end of 2017 and have not been extended since their expiration. Both can improve many low-income areas by allowing developers to invest in the communities and gain tax benefits while doing so. 

Amid these unsettled changes, the government could be at risk of shutting down if Congress does not pass legislation to approve new spending, similar to the government shutdown in December 2018. Spending caps are also coming back into the picture on Oct 1, which were adopted as part of the Budget Control Act in 2011. This could mean a $71 billion annual cut on defense spending and a $55 billion reduction in nondefense if Congress does not pass legislation to increase spending caps. 

Additionally, the government reached the height of its debt ceiling of $22 trillion on Mar 1; the Treasury Department has been taking “extraordinary measures” to keep it below the limit. The Treasury has the possibility of running out of financial resources before the August break, so there is an urgency for them to pass a debt limit increase temporarily – possibly until Oct 1.

Legislators have been proactive with trying to receive the extensions they desire. On Jun 20, 110 members of Congress sent over a series of extensions to the House Ways and Means Committee. Section 179D and 45L were included in the 34 extensions up for consideration. 

With 2020 being an election year, this makes it more challenging to pass the legislation due to the deep Democratic and Republican unrest. Bipartisan support is essential to the success of these unsettled matters. While the results of this matter remain unknown, we will be keeping a close watch on its progress. We are hopeful Congress will make a decision that is beneficial to the long-term viability of these energy tax incentives.  

 

The Tax Credits Your Winery is Missing Out On

The R&D tax credit is one of the most substantial tax incentives that businesses can take advantage of. For wineries, the potential savings could be significant. However, many are unaware that they even qualify or are not taking full advantage of the credit. National Tax Group can help wineries that fail to realize their maximum benefits understand which activities they participate in and expenses they front that qualify them for this incentive. 

If your winery is involved in any of the following activities, it most likely qualifies for R&D tax credits:

  • Developing wine caves
  • Developing land for wine cultivation 
  • Creating analytic or innovative software products for production 
  • Creating new harvesting technologies
  • Gene culturing
  • New tactics for spoiling prevention 
  • Creating innovative systems for preservation 
  • New techniques for wine blending 
  • Packaging and bottling innovation 

In order to qualify for the R&D tax credit, it is essential to understand the specific requirements and documentation that are necessary to qualify. Wineries that successfully produce and document their quantifiable research activities are rewarded with thousands of dollars to continue their work for innovation in this industry. 

Companies that haven’t previously taken advantage of the credits can look back to all open tax years — typically three to four years — to claim the missed opportunity. Do you think your winery is missing out on its potential savings? Give us a call at 561.257.3436 and let us perform an assessment on your business to see if you qualify. 

The R&D Tax Expenses You Are Overlooking and Could be Claiming

Knowing what to look for can open up more avenues to savings. R&D tax incentives are a significant missed opportunity for companies to increase savings and profits. However, proper documentation is required to gain the benefits of this credit fully. Here are three commonly incorrectly recorded areas to pay close attention to.

Claiming Employee Time as an R&D Expense

In many circumstances, businesses gain substantial tax savings when filing wages paid to in-house scientists, engineers, architects, and other technical personnel who are involved in research activities. However, companies are required to differentiate between activities that qualify for R&D credits, like experimental prototype development, and activities that do not qualify, like routine tasks. National Tax Group can help you organize your business’s documentation to ensure you have a well-detailed process in place. The most straightforward way to document R&D activities by employees is to require that they track how much time they spend on daily tasks. 

Examining Your Tax Savings Strategy and Process

National Tax Group is capable of doing an extensive evaluation of your qualified research activities to ensure your business is taking full advantage of this credit. We also calculate your refund based on your investment in employee wages and outside contractors. By taking an in-depth examination of your strategy and process, we can ensure that your business is rewarded in full for your R&D activities. 

The more information there is to prove your R&D eligibility, the more successful your claims will be when submitted. Let us take a look. Give us a call at 561.257.3436 to get started with one of our specialists.

The 4 Part Test You Need to Pass for Your R&D Tax Credits

4 part test diagram

In 1981, the federal government initiated the Research and Experimentation tax credit in an effort to create jobs and innovation in the U.S. The R&D tax credits were intended to be a temporary incentive to boost the economy. However, the program has been extended by Congress more than a dozen times until it was made permanent by the Protecting Americans from Tax Hikes (PATH) Act of 2015. 

Initially, the tax program was exclusive to necessary research expenses that typically occurred in a laboratory setting. However, modifications to the credit qualifications have made it available to a variety of businesses. 

R&D tax credit eligibility depends on the type of the work being conducted, and if it meets the IRS established criteria:

  1. Purpose: The research is done to improve the quality, function, or reliability of a process or product.
  2. Process: The research activities must involve stimulation, logical trial and error, assessing alternatives, and refining hypothesis.
  3. Uncertainty: The qualified activities must identify information to remove ambiguity in the development or improvement of a production process.
  4. Nature: The research done relies solely on physical sciences, biological sciences, computer sciences, or engineering.

What activities meet this 4-part test?

Here are some examples of qualifying research activities:

  1. Testing of new technology or concepts in your industry
  2. Creation of models or prototypes
  3. Productions of new, or improved versions of products, systems or formulas
  4. Developing or applying for patents
  5. Adding in equipment that improves upon a process
  6. Developing new software
  7. Designs for LEED/green initiatives
  8. Environmental testing
  9. Concept and designing of HVAC

Your National Tax Group qualified R&D tax credit expert can help you determine if your business activities meet the necessary criteria of the test by conducting a tax credit study. You can find out more information on how to get your personalized report here. 

179D Update: First Reports Examining Tax Extenders

US Capitol Building

The outcome of expired energy tax provisions has remained unknown in the last few months. Earlier this month, it was announced that Grassey released the first set of reports for the examination of the tax extenders. Within this report was one of the most popular incentives, 179D. If this extender were to be made permanent, it would benefit a broad group of industries that could take advantage of the energy-efficient deduction.

Both Cardin and Portman claimed they would push for the Fiance Committee to debate its own version of the tax extensions in September. This could be an indication that the chamber will not take up the extension package that is currently backed by House Democrats and Means Committee Chairman Richard Neal. Currently, The House version includes temporary expansions of tax credits that are geared towards low-income households.

The Means Committee’s bill includes tweaks to the budget in the estate tax threshold, which is viewed as unacceptable to the Senate Republicans. It remains to be seen what effect this new report might have on the extenders package, but we are confident there will be more concrete information soon.

National Tax Group has been monitoring the status of these significant tax provisions since plans to renew and extend them were first introduced. We are experts in these specialty areas of the tax code and are prepared to help all taxpayers obtain them once they are able to again. Contact one of our team members to learn about the expired tax provisions and the benefits they will bring you.