Taking Advantage of R&D Tax Credits 

Cedar Robinson from Warner Robinson, a solution provider at the marcus evans Tax Officers Summit XIII 2012, on benefiting from tax credits.

Interview with: Cedar Robinson, Managing Director, Warner Robinson


“The research and development (R&D) tax credit is currently underutilized by both large and small companies across a variety of industries,” says Cedar Robinson, Managing Director, Warner Robinson LLC. Organizations that are working to improve their products or manufacturing processes will most likely qualify for these credits, he adds.

From a solution provider company at the marcus evans Tax Officers Summit XIII 2012, in Hollywood, Florida, May 17-19, Robinson discusses Internal Revenue Service (IRS) audits, cost segregation studies and having the appropriate documentation in place.       

How can organizations take advantage of R&D tax credits?

Manufacturers and software companies frequently do not take advantage of the credits or, if they do, they often under-report the full amount of R&D credits they deserve. These companies should conduct a detailed study to maximize and document their R&D credits.

What must organizations do in order to claim R&D tax credits?

Organizations working to improve their products, software, or manufacturing processes will most likely qualify for R&D research credits. To claim credits, tax officers generally must file the appropriate tax forms with federal or state authorities. The key however, is to develop and maintain sufficient documentation to show that that their organization is undergoing qualifying activities. Some typical activities that are indicative of qualifying R&D activity include: developing or improving products, developing patents, modifying production processes, evaluating new product materials, designing new production facilities, automating processes via technology improvements or developing new or enhanced computer software. 

How can they ensure they have the appropriate documentation in place?

Having detailed documentation obtained from company engineers is critical for IRS audits. Tax officers must be able to work with their engineering department to be able to utilize the existing documentation obtained from engineers and to develop an approach to satisfy the IRS information requests without recreating the wheel.

Most large projects go through lengthy IRS audits, where the IRS evaluates documents, conducts interviews and sometimes proposes changes. Tax officers should evaluate each information request and provide the requested information the most strategic way possible.

What does the Tier I status mean for R&D tax audits?

Tier I is an IRS designation, where the IRS believes there is a potential for a high degree of non-compliance and that companies might not be applying the law in the right way or do not have proper documentation. In cases where Tier I rules apply, the IRS will ask many required questions and consult with a technical advisor who is trained in this area to help auditors with the claims and calculations for particular taxpayers.

What are the benefits of cost segregation studies?

Preparing cost segregation studies involves identifying, categorizing and reclassifying assets into different, shorter life groups, and life for tax depreciation purposes. The primary benefit is increased cash flows and lower taxable income.

Large tax payers often conduct cost segregation studies for major assets placed in service each year. However, it is also beneficial to evaluate all assets in service each year, not just the largest. The smaller items in aggregate can also provide a substantial value and additional cash flow for the organization.

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About the Tax Officers Summit XIII 2012

This unique forum will take place at The Westin Diplomat Resort & Spa, Hollywood, Florida, May 17-19, 2012. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on confronting the endless challenge of how to cope with the evolving tax world, the pressure of staying up to date with pending legislation and best practices for running the tax function.

For more information please send an email to info@marcusevanscy.com or visit the event website

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Please note that the Summit is a closed business event and the number of participants strictly limited.

About Warner Robinson

Warner Robinson is a leading tax consulting firm specializing in R&D credits, Section 199 Domestic Production Activity Deductions and Cost Segregation studies. Warner Robinson’s goal is to help its clients achieve success by leveraging its experience with large taxpayers and IRS examinations.  Warner Robinson serves primarily Fortune 1000 clients across the country from its Mid-West and East Coast offices.


About marcus evans Summits

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