The COVID crisis left countless businesses looking for new sources of capital, leading many companies to turn their attention to R&D credits for the first time. As difficult as the past year has been, that’s one silver lining.
While not every new process or way of problem solving qualifies for an R&D credit, businesses that have pivoted during the pandemic may well qualify for these important tax incentives, and nobody wants to leave money on the table. Companies should claim all the innovation incentives for which they’re eligible.
Still, the R&D tax credit system can be complicated, and in the scramble to raise funds some businesses cut corners, got bad advice or simply made poor decisions. Now the IRS is starting to pay more attention — including adding R&D credit fraud to their “dirty dozen” list of tax scams — and many businesses that made mistakes or poor choices when claiming R&D credits could soon face an unpleasant comeuppance.