8 MiMfg Magazine September / October 2022
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Member since September 2021 • Learn more at dstadvisorygroup . com
Could Your Recent Process Improvements Lead to a Tax Credit ?
It is estimated that only 6 percent of companies that could qualify for a Research Tax Credit ( RTC ) are actually claiming the credit . This little-known fact means manufacturers are potentially leaving billions of dollars on the table that could be going toward anything from employee incentives to capital upgrades — or even more research . This is largely because many of those eligible manufacturers are simply unaware that they qualify .
There are a lot of misconceptions regarding eligible activities . For many of us , when we hear the term “ research ” we often think of PhDs outfitted in white coats operating in dedicated research laboratories . But you may be surprised to find that things you ’ re doing today — and have been doing since the pandemic began in order to adapt to the changes now required to continue to be a successful business — could fall within the realm of research and qualify for the credit .
“ We ’ re here to bust these myths ,” says Diane Stogiannes , President of DST Advisory Group . DST , a woman-owned and Inc . 5000-declared 2022 fastest growing company , is headquartered in Southfield and they specialize in providing companies with guidance for their RTC claims .
“ Companies that are legitimately performing activities that would qualify for the credit may be able to truly improve their bottom line and do more with their cash flow ,” Stogiannes says .
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How We ’ re Innovating We ’ re more than tax professionals — we ’ re engineers and scientists who truly understand our clients ’ work . This allows us to bring a deeper knowledge base and appreciation to our interaction .
RTC , one of the most generous tax programs out there for tax payers , has been around since the 1980s and it was made permanent in 2015 . The U . S . Treasury budgets $ 10 billion every year for the RTC and it can be applied to all open tax years , which Stogiannes says is usually three years .
She explains that downsizing and supply chain issues led to process changes and raw material changes that could include qualifying activities or business expenses .
“ COVID-19 caused many manufacturers to pivot and pivot quickly , which forced them to change processes . Many of those process changes could lead to a tax credit ,” Stogiannes says .
Implementing Industry 4.0 advancements or anything in the area of developing , improving or integrating robotics , automation control sensors , semiconductors , microchips , electric vehicle ( EV ) components , solar panels or other
Diane Stogiannes President
DST Advisory Group
energy conservation technology could lead to substantial tax credits .
Even manufacturers that don ’ t think of themselves as high-tech companies could be sitting on significant tax credits . New fabrication techniques to improve quality or increase throughput , creating tools with new features , developing machining techniques , new processes such as smart tooling , quick-change inserts , RFID , etc . — these are all areas that have led manufacturers to significant tax credits .
One of the reasons why so few manufacturers are taking advantage of the R & D credit is having the right adviser . DST has a team of engineers , scientists , CPAs and tax attorneys that have helped many manufacturers identify and qualify for tax credits that they never knew existed . 6
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