Clients who apply for the R&D Tax Credit are required to show supporting proof of the work performed on the new/improved product or process.  The proof is presented in a report that discusses the business and how the business has fulfilled its obligations to meeting the criteria presented by the IRS.  In recent case, Siemer Milling v. IRS Tax Commissioner, in 2019, the U.S. Tax Court stressed the importance of proper documentation to firmly support an R&D Tax Credit Claim.

The documentation presented can include the following:

• Payroll records;
• Expenses (including those involved with marketing);
• Project lists;
• Project notes;
• Lab results; and
• Emails/Communications.

The supporting report should explain how the information provided answers the element in the Four Part Test.  If the business has engaged in multiple projects which qualify for the R&D Tax Credit claim, the business can choose to provide a compilation and analysis of the collective projects.

Businesses that fail in their R&D Tax Credit claim often do so because of confusion around documentation, qualifying activities and expenditures, and how credits should be applied.  

Our Paxterra Team has the experience to perform an analysis of the documents and determine which ones are relevant to firmly support your R&D Tax Credit claim.  We will put together a comprehensive report to help obtain approval by the IRS officer.

Please book an appointment using the button below and we’ll be happy to show you how we can help!