Varnex Insider September 2017 - Issue 71 | Page 26

BUSINESS CORNER // VARNEX INSIDER
THE R&D TAX CREDIT: A VALUABLE
OPPORTUNITY FOR THE IT SECTOR
BY TRACY LUSTYAN, ALLIANTGROUP
Technology is advancing rapidly, and nowhere
is this more evident than in the IT sector. From
the Internet of Things to an increased reliance
on automation and cloud-based solutions,
technology is changing the way we do business.
This is obviously great news for the IT
sector—and not just because their services
will be in heavy demand for the foreseeable
future. Due to the advancement of technology,
there is a growing demand for the services of
IT resellers, IT solution providers, and other
consultants within this industry, which has made
many of these companies eligible for a valuable
opportunity—and it is all thanks to one lucrative
tax credit.
The R&D Tax Credit: Keeping Innovation and
Jobs in the U.S.
The Research and Development (R&D) Tax
Credit has been a part of the tax code since the
1980s, but never has the credit been so widely
available for the benefit of U.S. businesses. As
a result of new legislation and other regulatory
changes, the R&D Tax Credit has evolved into a
premier anti-outsourcing incentive. In addition to
traditional research, today the credit is designed
to reward companies for enhancing their
products and processes and for keeping high-
paying technical jobs in the United States.
As you might imagine, this expansion has
played to the advantage of the IT sector, with
many companies qualifying due to the technical
nature of their services and employees. For
technical projects related to the development,
enhancement or integration of IT systems
and solutions, these businesses can receive
potentially hundreds of thousands of dollars in
tax savings.
To illustrate the real-world value this credit
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can provide, let’s take the case of an IT reseller
that received over $337,340 in federal and state
R&D tax credits for projects spanning a four-year
period. Among this company’s many qualifying
activities included the design and integration of
enhancements to a client’s existing business
system to reduce manual labor as well as
improve overall efficiency and accuracy.
Qualifying Projects
For a better understanding of the R&D Tax
Credit and its application to the industry, here
are a f