by Phuoc PharmSeptember 24, 2020

Growth in R&D Opportunities for Manufacturers in Response to COVID-19

Over the past few months, the landscape of how we work has continuously evolved in response to COVID-19. While it may come as no surprise manufacturers are among those who have experienced the biggest disruptions to their operations, we at McGuire Sponsel have been pleasantly surprised to see many of our clients in various manufacturing industries experience an increase in R&D activities.

As manufacturers have changed how they do business during an unprecedented pandemic, McGuire Sponsel has remained focused on helping our clients identify and maximize their R&D Credit opportunities. The following are examples of COVID responses which have qualified for the R&D Credit, which we have observed with some of our manufacturing clients:

  • Adding new product lines to help combat pandemic-related shortages (i.e. personal protective equipment (PPE) or sanitizing and antibacterial supplies)
  • Developing new designs in response to COVID-19 (i.e. bacterial-resistant plastic formulation or food packaging that eliminates cross-contact with others)
  • Adding new technology to enable remote/virtual operations (i.e. virtual communication software processes and e-commerce functions)
  • Developing new robotic and automated manufacturing processes
  • Adding new processes required to manufacture domestically
  • Creating new products when pivoting focus to more pandemic-relevant industries (i.e. shifting development efforts from oil, gas, and aerospace to consumer products and personal-use computer technology)
  • Completing process improvement projects that previously could not be prioritized (i.e. internal projects to reduce scrap or improve manufacturing efficiencies and quality

Regardless of the specific manufacturing industry or degree of operational disruption, all our clients have felt and continue to feel the financial uncertainties of this global health crisis. With the R&D Tax Credit, qualified taxpayers are eligible for significant cash flow in the form of a dollar-for-dollar tax credit. This federal credit is available retroactively (current and prior three tax years) for qualified wages, supplies, and contractor expenses.

Contact McGuire Sponsel today to see if changes to your manufacturing operations may qualify for the R&D Tax Credit.