Many of the design activities performed by architecture and engineering firms on a day-to-day basis can qualify for R&D and related incentives.
What is research and development? There are several different meanings for different purposes. The average individual may think of white lab coats, beakers, and graduated cylinders when they hear R&D. However, the tax code and the law describe a much more expansive definition of research and development. In fact, many of the design activities performed by architecture and engineering firms on a day-to-day basis can qualify as R&D.
For example, design, iteration, and evaluation of alternatives while trying to solve technical problems are innate to AEC firms’ activities. They are also the key ingredients to qualifying for R&D tax credits.
Take Aecom. In a recent ENR article, it’s reported that they’ve successfully claimed millions of dollars in R&D tax credits over the course of several years. In another example, the aerospace and defense engineering icon, Fairchild, remains a Benchmark research and development tax credit case. Likewise, Geosyntec, a geotechnical engineering firm, was recently successful in claiming R&D tax credits related to their fixed-fee contracts.
What does all this mean? It means that AEC firms remain a target rich environment for R&D tax credits.
The following case studies help to show how powerful these credits can be.
As you can see from the case studies, these tax credits can be very powerful. What’s more, you can typically go back and amend three years’ worth of tax returns.
What about being audited by the IRS? Even though there is a small likelihood of being audited, every study should be prepared as if it were going to be. And that’s why it’s so important to choose a competent consulting firm to do this.
BRAYN has a very large AEC client base and has tremendous knowledge of the industry, and of the time tracking software typically used, like Deltek Ajera, Vision, and VantagePoint. Not only does that mean a much lighter time footprint for you, but proper use of time tracking and understanding of the data can be instrumental in sustaining credits under exam.
We would be glad to provide a free Phase 1 assessment to show you your estimated tax credits and provide you with our very reasonable fixed fee options. Please reach out to us at info@brayn.com or (888) 773-8356.
Brady Bryan is CEO of BRAYN Consulting LLC. Contact him at brady@brayn.com.
