R&D Tax Credit Makes IRS Dirty Dozen List as Target of Common Scams
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This year, the R&D Tax Credit has yet again been named to the IRS Dirty Dozen list of scams peddled by shady tax preparers.
Improper claims of business credits
"Improper claims for the research and experimentation credit generally involve failures to participate in, or substantiate, qualified research activities and/or satisfy the requirements related to qualified research expenses. To claim a research credit, taxpayers must evaluate and appropriately document their research activities over a period of time to establish the amount of qualified research expenses paid for each qualified research activity. Taxpayers should carefully review reports or studies to ensure they accurately reflect the taxpayer's activities."
We've heard a lot this year about a handful of R&D tax credit firms who aggressively target startups and charge 20-30% fees without doing any type of real R&D Study (or, determining whether or not the business actually qualified for this tax credit) at all.
In response to all of the feedback we've received about these firms from our accountant partners, we compiled a list of 8 red flags taxpayers should be aware of when evaluating their R&D Tax Credit provider. As one example, if the R&D Study preparer simply lists employees' job responsibilities with what looks like a lot of copy-and-pasted language from person to person, you may be at risk under audit.
The only reason to pay any fee in order to claim the R&D Tax Credit is for a complete analysis of each employees' Qualified Research Activities, resulting in bulletproof documentation that will protect your tax credit in the event of an audit.
Our #1 priority is and always will be to help accountants use data analytics to deliver better R&D Study services and compile strong Qualified Research Activity (QRA) documentation that will protect clients in the event of a future IRS audit.
TaxCredit.ai now uses artificial intelligence (AI) in its QRA activity classification algorithm, making its employee-level QRA insights more accurate than ever.
Want to learn more about how we help accountants use AI and data analytics to claim the R&D credit and protect their clients in the event of an IRS Audit? Get in touch with us today!
