Why CPA Firms Should Partner with an R&D Tax Incentive Expert

When a person has a specific medical issue, he or she sees a medical specialist. When you want to invest in the stock market, you likely seek advice from an investment advisor. The same goes for research and development (R&D) tax credits. Partnering with an R&D tax credit firm that focuses exclusively on attaining the maximum number of credits for your clients makes good, practical sense. In working with an external R&D tax expert, what a CPA firm really wants to sell is a meeting with a valued, trusted advisor of the firm.

Far too often, we see accounting firms offer R&D credit services themselves without the necessary background and expertise. This can quickly result in “expert error,” as the firm realizes they can’t assume to be an expert at what they are not. They also soon realize that R&D credit service requires far more sophistication, experience, and nuance than they bargained for.

Partnering with an R&D Credit Expert

Whenever a firm offers a specific, highly detailed service, it is a good practice to draw on the expertise of a specialist. That is why we recommend that CPA firms partner with an outside expert to manage the nuts and bolts of an R&D tax credit study for their clients. Most firms don’t have the expertise or time necessary to perform this type of credit study, and it’s far more cost-effective to outsource the effort.

For many accounting firms, the process of establishing new client relationships is burdensome—it requires the firm to devote resources that could serve existing clients to an effort with no guarantee of success. Your clients may also perceive the documentation process to be challenging; yet having expertise behind the numbers minimizes the risk of an audit and maximizes the likelihood of a successful defense should an audit occur.

What to Look For

Once you understand that R&D tax credits present an outstanding opportunity to grow your practice, you will want to look for specific qualifications in a tax credit partner. The ideal partner will:

• Provide outstanding references
• Have an extensive, positive reputation in the accounting community
• Have the resources to service your CPA firm’s clients locally throughout the U.S.
• Have an outstanding record of success defending their R&D tax credit studies
• Be accessible to your firm
• Be easy to work with and flexible in your desired client approach
• Work with your clients without going around your relationship—you don’t want to work with a service provider who markets directly to your clients
• Possess the highest degree of integrity
• Understand your clients’ business or industry
• Charge reasonable and justifiable fees

The R&D tax credit can be a lucrative incentive for your innovative clients and for your CPA firm. If you think one of your clients might be unsure about either the potential benefits of the R&D tax credit or working with a joint venture partner, we recommend that they have a conversation with other end-user clients of the R&D specialist being considered to better understand the process and the opportunity for potentially large tax savings.

The bottom line: Clients should be made aware that they are entitled to R&D tax credits if they perform qualifying activities. Most CPA firms are surprised at just how many of their clients do. Eligibility requirements are clearly defined by the IRS and state governments—companies seeking to take advantage of the credit must be prepared to identify, document, and support their qualifying activities. It is essential that businesses establish appropriate tracking mechanisms and documentation strategies for their R&D activities.

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