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Tax & Business

Tax Credits & Incentives

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It is a proven fact that more than 50% of credits and incentives go unclaimed annually. Marcum wants to ensure that these opportunities are never missed. Our professionals have extensive experience identifying and securing credits and incentives in every industry segment.

Marcum's Tax Credits and Incentives Services practice can help your business reduce costs, generate refunds and provide the advice to unlock and secure favorable incentives packages. We can help identify tax and non-tax savings opportunities for job creation, research, training and other qualified expenditures.

Busy companies can overlook non-traditional methods to reduce costs. When operations and the general business climate run at lower levels, opportunities present themselves to utilize tax incentives that impact the bottom line by:

  • Avoiding paying unnecessary taxes.
  • Obtaining immediate tax refunds.
  • Reducing operational costs.
  • Improving earnings before interest and tax, net income and shareholder value.
  • Enhancing the economic value of company initiatives.
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The Research & Development Tax Credit

The Research & Development tax credit is one of the few domestic tax credits existing under current tax law - and is often overlooked and most often not utilized to its maximum potential. This credit is an important tool for maximizing a company's value. Companies now have the ability to apply for the Alternative Simplified Tax Credit (ASC) which may be most beneficial to companies that have not reported research credits in the past or previously been limited due to the base amount rules. The Research & Development Tax Services team at Marcum LLP can help.

Marcum Research and Development Tax Credit (RDTC) Services

Our RDTC practice group has over 30 years of experience in applying the Research and Development (R&D) tax credit to a variety of industries, including high technology, software, manufacturing and service industries. We enhance our capabilities through an alliance with RD Tax Savers, who provide technical and engineering expertise.

Is your company eligible for a tax credit?

No matter if your business is doing well or in loss situation, there are a variety of credits and incentives available.

Some additional federal domestic credit and incentive programs include:

  • Employment based credits such as the Work Opportunity Tax Credit.
  • Economic Development Credits.
  • Energy Credits and Incentives.
 
Our Approach to RDTC Studies

Once the determination has been made that a business is eligible for the RDTC, we undertake a preliminary feasibility study. This preliminary study estimates the expected range of federal and state credits, along with the cost to produce the studies, to allow the business to make an appropriate cost benefit decision regarding whether to proceed with the Study.

As a client opts to proceed, we will initiate the Study by obtaining a more in-depth understanding of the client's business and interviewing appropriate individuals who have been participants in various stages of the research and development. This will enable us to ascertain which projects and costs (known as Qualified Research Expenditures or QRE(s)) should be included in the calculation of the Credit. The results are summarized in an RDTC report which includes the information needed to obtain the federal and state credits through either a tax return or an application based upon state jurisdiction.

Marcum's professionals advise how to best track and capture the QRE(s). Our team will provide representation to support the amount of the credit in the event of an examination by a taxing authority.

Benefits include:

  • $1 for $1 Reduction on taxes owed or taxes paid.
  • Additional future tax savings.
  • Significant credits/ cash back from previous three years' returns.
  • Credits that have not been claimed may be carried back one year and forward 20 years.
  • Overall increase in company assets and value.

Sample of Marcum RDTC Clients:

  • Manufacturing.
  • Fabrication.
  • Engineering firms.
  • Chemical.
  • Machine shops.
  • Software development.
  • Electronics.
  • Biotechnology.
  • Pharmaceutical.
  • Professional services.
  • Apparel.
  • Waste management.
  • Veterinary clinics.
  • Banks, mortgage & titles companies (internally developed software).
Payroll-Based Tax Credits

Every tax year, hundreds of millions of dollars are unclaimed by taxpayers from the U.S. Treasury, for specific "payroll-based" tax credits. These tax credits are available to all U.S. taxpayers that have employees who are paid via Form W2.

Work Opportunity Credit ("WOTC")

The Work Opportunity Tax Credit ("WOTC") is a payroll-based tax credit that is often overlooked. The process to claim the tax credit can be burdensome. To claim the WOTC, the taxpayer must hire a qualified employee from one of 10 target groups, and specific forms must be filed with the state's WOTC Coordinator within 28 days from date of hire. The credit amount can range from $2,400-$9,600/employee depending upon which target group the qualified employee is part of. Marcum's Tax Credit and Incentives Group provides all WOTC processing, vouchering and management to capture the credits. The TCI Group utilizes MarcumSecure, the Firm's encrypted information transfer system which ensures that data sent between Marcum and its clients is secure.

Example of WOTC Savings:

  • Total New WOTC Hires: 10
  • Total Average WOTC Credit Per Year: $2,400
  • Total Current Year Tax Credit: $24,000
 
Federal Empowerment Zone Tax Credit ("FEZ")

The Federal Empowerment Zone ("FEZ") Tax Credit was created in 1996 by the Clinton Administration. There are 40 federal Empowerment Zones located within the U.S. The FEZ credit has a history of expiring, retroactively being extended and extended again. Most recently, the FEZ expired on December 31, 2016 and is still awaiting extension. The FEZ was typically included in Congress's tax extender legislation in previous years. The Trump Administration has made no public comment on its view of the FEZ. There are amended return opportunities that may exist for the 2013-2016 tax years. The credit amount is equal to 20% of the first $15,000 in wages paid, being capped at $3,000 per employee, per year. The employer and employee must reside within the Empowerment Zone and the employee must work in the FEZ. Exempt businesses such as golf courses, gaming venues, and liquor stores are not eligible for this tax credit. Marcum's TCI group can determine whether your business is in the FEZ and estimate what your refund potential might be. Marcum's TCI group manages the entire process to capture all qualified tax credits for you and your business.

Example of FEZ Refunds:

  • Total Employees in FEZ: 150
  • Qualified FEZ Employees: 15
  • Tax Credit Per Employee: $3,000
  • Total Tax Credits Claimed Per Year: $45,000
  • Total Credits per All Qualified Amended Returns: $135,000

Newsletter

Beyond the Numbers

Roundup of business and tax planning ideas

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Tax Credits & Incentives Brochure

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Contacts

Select the region to view contacts.

Diane  Giordano

Partner
Tax & Business
Melville, NY
William  Kuhlman

R&D Tax Credits Leader
Tax & Business
Philadelphia, PA
Jeffrey  Winkleman

Partner-in-Charge
Corporate Taxation
Tax & Business
Philadelphia, PA
 
2017 YEAR-END TAX GUIDE

The Marcum 2017 Year-End Tax Guide continues our tradition of providing timely tax guidance for the upcoming year.

 
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