Alex Edmondson of PL0 caught up with Jennifer Valencia, President of Research Tax Services. RTS is committed to teaching industrial businesses to understand and leverage the R&D Tax Credit.
PL0: Please give us an introduction to Research Tax Services. How did it originate and what is its ultimate mission?
I founded Research Tax Services alongside my business partners about a year and a half ago. This was soon after I finally realized that I was truly an entrepreneur at heart, so I wanted to go out and build my own company. I worked in sales & marketing for the past 25 years and felt it was time to finally do something for myself. After looking into the R&D Tax Credit and seeing what a great incentive it is, it made a lot of sense for me to start my business. Not a lot of businesses are aware of this particular tax incentive and how it applies to their business, so it excites me to be able to help businesses learn more about this tax credit advantage. I’ve had a great team around me since the beginning that have really been essential in our success. Our team consists of tax lawyers and engineers, and we partner with CPAs around the country.
PL0: For someone who is not familiar with the R&D Tax Credit, can you explain how it works?
The R&D Tax Credit was created in 1986. It was originally formed so the government could allow companies to collect this credit as a dollar-for-dollar reduction on their federal taxes. This allowed companies to re-invest internally and continue to be innovators to keep the economy thriving. However, this credit is so specialized that many CPA firms aren’t aware that many of their clients are eligible. That’s where RTS comes in, we partner with CPA firms to help their clients understand the benefits they could receive.
All in all, it is a government-issued credit for companies that prioritize innovation and provides a full deduction on either your federal taxes or payroll tax.
PL0: Around what percentage of companies are eligible to receive this credit?
I would probably say 90-95%. We get asked a lot: what companies qualify for this incentive? The answer is that the list of companies that don’t qualify is a lot shorter. Most likely, if you have a company that is creating something new or developing a new process you are eligible for this credit. Popular customers are software developers, engineers, scientists, food/beverage, and more. I would say there are probably over 60 industries off the top of my head that we have focused on. Really, anytime you’re making something bigger, better, or stronger you can receive this credit.
PL0: The R&D Tax Credit business seems to be a rising industry. What makes Research Tax Services unique when compared to it’s competitors?
The R&D Tax Credit business has definitely grown nationwide and especially here in Houston. What really makes us stand out is our ability to not only prepare the tax form for the CPA, but the technical report we do along with the form. What this report does is tell the IRS why you believe you should receive this credit, and we do this for you. Another thing unique about RTS is that we defend your claim under audit if it is selected.
There are a lot of companies that will just give you the form and then walk away. They often charge extra if the client needs them to defend their company. At RTS, we do everything for 20% of the findings.
PL0: If I was a business owner interested in applying for this credit, how much time would I need to dedicate? Is it a hassle?
A lot of companies will bombard you with checklists and due dates that lead to a stressful and irritating process. Our specialists are very good at identifying these credits by simply taking a look at your PNL. We ask for your PNL Statements for the current year along with the 3 past years. We are then able to create a model for how many credits you are eligible for just by looking at things like employee salaries, capital gains, etc.
All it takes is a simple 30-minute call with us which is free for the customer, allowing us to give you a good estimate of what your credit number is. We try to make it as smooth and easy for our clients as possible because we know their time is very valuable to them and their employees.
PL0: Does Research Tax Services work with companies that are a particular size? Do certain companies benefit more than others?
RTS works with companies of all spectrums. We have worked with 15 billion dollar companies all the way down to 1 million dollar companies. There is a wide range because we believe that our expertise allows us to identify ways that any company can be eligible. We also work nationwide and have customers from Seattle, Kentucky, Houston and more. There’s not a part of the nation that we don’t cover.
The credit benefits all sizes of companies in different ways. For companies under 50 million, they can use this credit for payroll taxes. For large companies, it better helps with overall federal taxes. At the end of the day, any refund is beneficial and appreciated by the company.
PL0: Where do you see this industry, along with Research Tax Services, in 10 years?
I think this is an evolving section of the tax code and has become much broader than when it started in 86. There had previously been a lot of hesitation because of the name ‘Research and Development, but that will continue to die off. It’s all about education and continuing to reach out to new people and let them know that they could be eligible for this credit. It’s written into law, so it will never go away.
If we’re being honest, I hope to be somewhere on a beach in 10 years looking back at my success. However, I plan on always being available for my clients and will continue to network and outreach up until retirement. It really does excite me and I find satisfaction in helping companies save money.
To determine how to leverage the R&D tax credit effectively, contact Research Tax Services at firstname.lastname@example.org.