Companies that take full advantage of these credits can literally reduce their overall tax liability by millions of dollars each year. The tax savings opportunities provided via these credits are not exclusively limited to those companies in “traditional” development fields (such as high-tech, bio-tech, pharmaceutical, etc.). Simply stated, any company that conducts activities that meet the IRS’s definition for “qualified research” can take advantage of these tax credits.

It comes as no surprise, of course, that strict regulatory guidelines exist that define what constitutes “qualified research” activities. In order to substantiate tax credits claimed, companies must gather and present contemporaneous documentation that demonstrates that regulatory guidelines are being met.

Generating required R&D credit support documentation is a time-consuming activity that can potentially overwhelm internal tax department resources. Because of this, corporate tax departments often explore the two primary options for R&D credit documentation assistance outside of the tax department: an external R&D credit study (usually conducted by one of the “Big 4” national accounting firms) or an internal questionnaire approach that shifts the burden of directly documenting R&D activities to the Engineering organization.

An external R&D credit study conducted by an outside (typically “Big 4”) accounting firm is often the right approach for a company to pursue. This is particularly true for companies that have never taken advantage of research and development tax credits and are literally starting at “ground zero”. However, once a company has outsourced an initial R&D credit study, contracting with the “Big 4” to perform similar studies in subsequent years can become cost prohibitive.

Utilizing internal Engineering resources to document R&D activities via a questionnaire is also an approach that works for certain companies under certain circumstances. For example, companies with a significant Engineering management layer in their organization can often successfully implement a questionnaire system for gathering R&D credit documentation. However, in many companies this approach tends to excessively draw Engineering resources away from their primary objective of moving the company forward through innovation and invention.

PTCS provides an outsourcing option that is an alternative to the approaches described above. Since our overhead costs are minimal, we are able to provide professional R&D documentation services at a fraction of the average “Big 4” rate for similar services. Our approach also minimizes the disruption of your Engineering organization. Engineering personnel will always be involved in any R&D credit study—their involvement is a necessary evil since it is their activity that must be documented. The key is to find an approach that minimizes the impact on Engineering while maximizing the credits that can be claimed.

The PTCS approach to gathering and compiling R&D credit documentation is a systematic process that focuses on identifying and interviewing the appropriate personnel within your organization. Information gathered during these interviews becomes the foundation for the written narratives that are generated for the purpose of documenting qualified R&D activities. The PTCS approach also relies heavily on the utilization of pre-existing internal (contemporaneous) documentation to support claims that credit-worthy activities have occurred within a given department. We can help identify internal reports that will have the maximum positive impact in supporting credits claimed. This cost-saving approach allows you to save time and money documenting R&D credits by taking advantage of reports that have already been generated for other purposes!

When considering whether your R&D credit documentation function should be outsourced to PTCS, consider the following:

1. Utilizing PTCS as an extension of your tax department allows existing tax department personnel to continue working on their current assignments…
2. PTCS’s professional documentation packages demonstrate to the IRS that you understand and have followed regulatory documentation guidelines. This puts you in a better position to negotiate credit amount settlements with the IRS because you can fully support the inclusion of certain departments in your credit calculation…
3. PTCS works hard to minimize the amount of time required for an R&D interview, and we respect the fact that your Engineering organization exists first and foremost to innovate. Our process is minimally disruptive—this helps us to earn trust and respect from your Engineering group…
4. R&D credit documentation services are the primary tax consulting services offered by PTCS. We will be there for you year after year. As we gain familiarity with your organization, you will realize a savings in fees from the ensuing gains in efficiency…
5. PTCS strives to build a personal relationship with each client. Because we do all of the work ourselves, there isn’t a revolving door of staff-level personnel conducting the interview process each year. We understand that we are asking your engineers to discuss highly sensitive, highly confidential information. Generating the best documentation requires that engineers trust us enough to engage in open discussions with us. When engineers see the same face each year, a trusting relationship ensues.

To better illustrate the PTCS R&D credit documentation process, we have outlined below the typical “flow” for an R&D engagement. As each engagement is unique, however, please note that we will always work with you to arrive at the best approach for your organization.













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