Paint & Coatings Industry - January 2009 - (Page 35)

Credit Program and provide certainty to businesses trying to budget R&D costs Coatings Companies are Likely Participants Personnel from Affluent Consulting of Tampa, FL, have recognized that the coatings industry represents a significant segment of companies likely to have expenditures that would qualify for the R&D Tax Credit Program. Affluent works with clients to identify those R&D expenditures and file amended tax returns for as many as four years, retroactively. Companies can also take advantage of the credit in subsequent years. In actual fact, the Internal Revenue Service views research and development as extremely broad, thus opening up the potential for countless businesses in the coatings industry to take advantage of the R&D Tax Credit. Billions Awarded to Only a Fraction of Those Eligible It is estimated that over $8 billion in R&D tax credits are awarded annually to qualified companies in the United States. Yet, the IRS estimates that a mere 20% of companies who would have qualified have taken advantage of this program that was designed to encourage innovation. Under-Utilized Program The Federal R&D Tax Credit Program has been in existence since 1981, but was utilized by only the most technologically sophisticated companies until 2001. That year, U.S. tax laws were redefined to create lucrative new incentives for companies who continued to innovate, allowing a much greater number of companies to qualify for the R&D tax credit. Seven years later, most eligible companies still do not take full advantage of this opportunity and continue to pay billions of dollars to the U.S. government even though their R&D efforts qualify them for these substantial, annual credits. In many instances, even a company’s accountant or CPA firm may miss significant tax saving opportunities because the process is still not simple. Due to the complexity of U.S. tax statutes, it often takes very careful examination of regulations, case law, rulings and treatises by subject matter experts to navigate the system and successfully uncover and capture all qualifying research. The roadblocks to claiming these R&D tax credits include lack of awareness and the time required to document a company’s eligibility for them. Many companies fail to take advantage of the R&D tax credit because they define research and development as a clear black and white definition. Qualifying Activities Due to the strong emphasis on innovation through R&D within the coatings industry, there are many activities and expenditures that will qualify companies for the R&D tax credit. Many of those activities are easily identified as R&D expenditures and thus would qualify. Among these, a small number of examples include: • Process improvements intended for greater efficiency and cost effectiveness; • Custom or “in-house” software development specific to a company’s internal needs; • New materials evaluation and selection including various types of finishing; and • Physical/chemical testing to evaluate coating performance. This list is a small percentage of qualifying examples. For a more comprehensive list of qualifying activities, visit www.Affluent-Consulting.com. Seek Professional Help While it is clear that the R&D Tax Credit Program is significantly under-utilized, companies who have never tried to document their eligible R&D expenditures are cautioned to seek professional assistance. For most companies, a thorough process is in order. PA I N T & C O A T I N G S I N D U S T R Y 35 http://www.Affluent-Consulting.com

Table of Contents Feed for the Digital Edition of Paint & Coatings Industry - January 2009

Paint & Coatings Industry - January 2009 Contents Viewpoint Industry News Calendar of Events Company News Names in the News Synthesis of an Eco-Friendly, General-Purpose Binder Based on Agro-Waste Materials Supplier Showcases – Green Technology Federal R&D Tax Credit Program Helps Coatings Industry in Tight Economy New Generation of Silica-Encapsulated, Ultramarine Blue High-Performance Pigments Cleaning Up in the Coating Business Low-Odor, VOC-Free Renewable Coalescents for Latexes Used in Very Low-VOC Paints Materials Watch Products Classifieds Advertiser Index

Paint & Coatings Industry - January 2009

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