Facing an IRS Audit of Your R&D Tax Credit? We Can Help.
Receiving a notice from the IRS can be a stressful experience for any business owner. When that notice specifically targets your Research and Development (R&D) tax credit claim, it can feel like your innovation is being unfairly questioned. An audit doesn't mean you've done something wrong. The R&D tax credit is a complex area of tax law, and the IRS frequently examines these claims to ensure they meet the strict qualification and documentation requirements.
You do not have to face this process alone. Our tax attorneys provide comprehensive audit support for businesses that have claimed the Research and Development tax credit. We manage the process from start to finish, allowing you to stay focused on running your business. Our team has assisted clients across the U.S., providing the guidance needed to navigate a government inquiry with confidence.
Why Do R&D Tax Credit Claims Face Scrutiny?
Have you ever wondered why your R&D claim was selected for review? The IRS pays close attention to these credits for several key reasons:
- Complex Qualification Rules: To qualify, your activities must pass a "four-part test." You must demonstrate that your work was technological in nature, aimed to eliminate uncertainty, involved a process of experimentation, and was intended to create a new or improved business component. Proving each of these elements requires a detailed and persuasive narrative.
- Substantial Documentation Requirements: A successful R&D claim is built on a foundation of solid proof. This goes beyond simple financial statements. The IRS will want to see project plans, technical notes, test results, time-tracking records, and communications that contemporaneously support your research activities.
- High Potential for Error: From miscalculating qualified research expenses (QREs) to including activities that don't meet the technical definition of R&D, there are many areas where businesses can make mistakes without proper guidance.
Our tax attorneys help you understand what the IRS is looking for and how to present your information clearly and effectively.
How Our Tax Attorneys Can Defend Your R&D Claim
When you engage with us for R&D audit support, our tax attorneys take a proactive approach to defending your claim. Our process is designed to shoulder the burden of the audit and build the strongest possible case on your behalf.
- Managing IRS Communications: We become the primary point of contact with the IRS agent assigned to your case. Our team handles all correspondence, responds to Information Document Requests (IDRs), and manages all deadlines, ensuring the process is handled professionally.
- Gathering and Organizing Documentation: We work with you to collect and organize the essential documents needed to substantiate your claim. This includes payroll records, supply invoices, contractor agreements, and, most importantly, the technical documents that prove your work qualifies as research and development.
- Building a Strong Factual Narrative: An auditor needs to understand what you did and why it qualifies as R&D. We help translate your technical projects into a clear narrative that directly addresses each part of the IRS's four-part test, connecting your expenses to specific qualifying activities.
- Representing You in Meetings: We’ll represent you in all meetings and interviews with the IRS, presenting your case and answering the examiner’s questions.
- Handling Appeals and Next Steps: If the initial audit results are unfavorable, we are prepared to guide you through the appeals process and, if necessary, represent you in Tax Court.
For many businesses, particularly Start-Ups, an R&D credit audit can be especially daunting. Our tax advisory services are structured to provide robust support for businesses of all sizes.
Proactive R&D Tax Credit Audit Defense
If the IRS is questioning your claim, an experienced tax attorney can proactively analyze your documentation from an auditor's perspective to identify and address potential weaknesses before they escalate. Contact us at (410) 497-5947 or schedule a confidential consultation here.
