Warner Robinson utilizes a phased approach to conducting a corporate R&D tax credit project and/or Section 199 study. Often, we can combine these two tax incentive projects within the same phases to gain efficiencies and require less time of your company’s engineering, manufacturing and accounting staff.

Our approach to a combined R&D and Section 199 study employs the following phases:

Phase I – Scoping

The goal of Phase I is to gather some preliminary data and information by reviewing your company’s operations and conducting some initial interviews with accounting, finance and engineering personnel to assess potential R&D tax credit and Section 199 benefits.

This phase includes gathering some cost information such as a company P&L, departmental org charts and review of the business units and departments within the organization including meetings with key manufacturing and engineering personnel to assess potential qualified activities both for the R&D credit and Section 199 deduction.

The deliverables from Phase I typically include:

  • Potentially eligible QREs (qualified research expenses) for the research credit and preliminary base period review including assessment of the Alternative Simplified Credit (ASC) and historical base period.
  • Preliminary R&D credit estimate including state R&D benefits
  • Assessment of activities potentially eligible for the Section 199 deduction (qualified activities versus non-qualified)
  • Review of potential QPAI (qualified production activities income) which is determined by reviewing qualified receipts minus certain direct and indirect expenses attributable to the company’s production activities
  • Draft Section 199 deduction estimate
  • Timetable and Workplan for Phase II detailed study

Phase II – Detailed Study

In order to claim and sustain R&D tax credits and Section 199 benefits, the IRS requires adequate documentation substantiating both the calculations and the nature of the work that may qualify for these benefits. Thus, Phase II focuses on collecting and organization the necessary documentation to ensure the documentation is audit-ready, well organized, meets typical Information Document Requests (IDRs) that agents issue during the course of an examination.

Specifically, our Phase II key documentation and deliverables consist of:

  • Memoranda and technical interview reports documenting the nature of the qualified activities (both Section 199 and R&D activities) undertaken by your company
  • Contemporaneous documentation in a well organized format to further support the qualified activities
  • Detailed calculations and supporting work papers tying back to company accounting records which support the calculation of R&D tax credits and Section 199 deduction

Phase III – Audit Support

Warner Robinson’s goal is to not only gather necessary records to support an audit of R&D or 199 benefits, but to be there for you during this process. The Phase III Audit Support should be one of your most important considerations in choosing a service provider and both Bruce Warner and Cedar Robinson have over 15 years of expertise, including Mr. Warner’s six years as an IRS attorney. We believe our experience in working through IRS audits is another key differentiator between Warner Robinson and other firms.

Our goal in Phase II is entirely geared towards the Phase III Audit Support and ensuring that your benefits are supportable during the audit process. Learn more about our government and audit expertise.

Other Benefits of Our Services

Personalized Service

It’s not always easy to find a personal representative when seeking services from a large accounting firm. Warner Robinson’s approach is to provide the highest level of personal service to our clients including obtaining the hands-on expertise offered by our two Managing Directors and Corporate Tax Consultants, Bruce Warner and Cedar Robinson.

Teaming Approach

Warner Robinson can also employ an approach where company in-house personnel and Warner Robinson personnel team together to complete a project. This approach reduces corporate tax consulting costs and is a very effective methodology where some in-house resources are available to assist, but either do not have enough availability to complete the project, or your company seeks to have an R&D and/or Section 199 expert supplement your in-house staff.

Alternatively, if Warner Robinson fully conducts the study, our lean-team approach ensures that only the right amount of personnel are involved with your project to prepare a high quality deliverable without extra personnel or overhead associated with larger firms. This keeps your costs down and provides for an efficient study, including efficiently utilizing your company’s engineering and accounting personnel so as not to require an overly burdensome amount of their time.