If you are a government contractor, there is a good chance you are missing out on one of the largest tax incentives in the tax code.
The reason? A single, persistent myth: "If the government pays us to do the work, we can't claim the R&D Tax Credit."
On the surface, it sounds logical. The IRS "Funded Research" exclusion says you can't claim credits for work someone else paid for. So, most contractors see a "Department of Defense" header on their contract and automatically assume they are disqualified.
Here’s the reality: That incorrect assumption is costing government contractors millions of dollars every year.
The "Funded Research" rule isn't a stop sign for contractors; it's a hurdle. And with the right legal analysis, it is a hurdle you can clear.
Qualifying for the R&D credit isn't about who the customer is. It’s about the specific terms of how you are paid and what rights you retain.
Standard government contracts are hundreds of pages, thanks to Federal Acquisition Regulation clauses and legalese. Most CPA firms don't have the time or expertise to dig through them. We do.
When Frost Law reviews a contract, we look for two specific "Green Lights" that open the door to massive tax savings:
1. Are You at Risk? (The "Financial Risk" Test)
Many contractors think a "Fixed-Price" contract is enough. It’s not. The IRS requires more. Frost Law analyzes your Inspection and Acceptance clauses to answer one critical question:
2. Do You Own Your Ideas? (The "Rights" Test)
You might see "Unlimited Rights to the Government" and think you've lost your Intellectual Property rights.
The difference between "Funded" (no credit) and "Unfunded" (huge credit) often comes down to a few sentences buried in a 50-page agreement.
You are experts in defense, aerospace, and engineering. You shouldn't have to be experts in tax law, too.
That’s where Frost Law comes in.
Don’t let a misunderstanding of the "Funded Research" rules shrink your bottom line. Let our team review your major contracts. We know exactly what to look for to identify qualified R&D tax credits.
Ready to see what you’ve been missing?
Click here to schedule a Review or call us at (410) 497-5947. Let’s find out how much cash you’ve left on the table, and how to get it back.
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If you are a government contractor, there is a good chance you are missing out on one of the largest tax incentives in the tax code.
The reason? A single, persistent myth: "If the government pays us to do the work, we can't claim the R&D Tax Credit."
On the surface, it sounds logical. The IRS "Funded Research" exclusion says you can't claim credits for work someone else paid for. So, most contractors see a "Department of Defense" header on their contract and automatically assume they are disqualified.
Here’s the reality: That incorrect assumption is costing government contractors millions of dollars every year.
The "Funded Research" rule isn't a stop sign for contractors; it's a hurdle. And with the right legal analysis, it is a hurdle you can clear.
Qualifying for the R&D credit isn't about who the customer is. It’s about the specific terms of how you are paid and what rights you retain.
Standard government contracts are hundreds of pages, thanks to Federal Acquisition Regulation clauses and legalese. Most CPA firms don't have the time or expertise to dig through them. We do.
When Frost Law reviews a contract, we look for two specific "Green Lights" that open the door to massive tax savings:
1. Are You at Risk? (The "Financial Risk" Test)
Many contractors think a "Fixed-Price" contract is enough. It’s not. The IRS requires more. Frost Law analyzes your Inspection and Acceptance clauses to answer one critical question:
2. Do You Own Your Ideas? (The "Rights" Test)
You might see "Unlimited Rights to the Government" and think you've lost your Intellectual Property rights.
The difference between "Funded" (no credit) and "Unfunded" (huge credit) often comes down to a few sentences buried in a 50-page agreement.
You are experts in defense, aerospace, and engineering. You shouldn't have to be experts in tax law, too.
That’s where Frost Law comes in.
Don’t let a misunderstanding of the "Funded Research" rules shrink your bottom line. Let our team review your major contracts. We know exactly what to look for to identify qualified R&D tax credits.
Ready to see what you’ve been missing?
Click here to schedule a Review or call us at (410) 497-5947. Let’s find out how much cash you’ve left on the table, and how to get it back.
