As technology continues to become more prevalent in an array of industries, companies are seeking ways to integrate automation and robotics into their business environment. The design and implementation costs for an automation system can be quite expensive. However, due to the technical requirements of automation and robotics, companies that seek to develop or integrate these systems are great candidates for Research and Development (R&D) Tax Credits.
Common activities that would qualify for the credit include the design of the machinery and robotics, discovering the optimal sequence of operations, and meeting internal and external tolerances and specifications. In addition, McGuire Sponsel recognizes that there is much internal time and cost spent in configuring the automation and fine-tuning the process to create an efficient production cycle.
In addition, manufacturers that export automated equipment or robotics to a foreign country (including Mexico and Canada) are candidates for IC-DISC. Our team assists in setting up and maintaining the IC-DISC while maximizing the benefit by performing a detailed annual transaction-by-transaction analysis.
Success Story: Automation Design
A company that specializes in designing and fabricating automated material handling systems engaged McGuire Sponsel to conduct a study for an originally filed return. McGuire Sponsel conducted interviews with the key technical employees at the company to discuss qualified projects that occurred during the study year. Through these interviews, McGuire Sponsel identified qualified wages, supplies, and contract research totaling more than $3.8M, which resulted in a federal credit over $269k as well as $121k in state credits.
Success Story: Automation & Robotics
McGuire Sponsel assisted a growing automation and controls company to claim the credit on an originally filed return. McGuire Sponsel professionals conducted interviews with both new and experienced personnel to determine the percentage of time each employee spent on qualified projects and activities. Through the interviews and a review of the project and financial data, McGuire Sponsel calculated over $3.2M in qualified wage expenses. Additionally, McGuire Sponsel was able to classify over $230k in qualified supply costs and $1.5M in contract research costs. The total QREs eclipsed the previous year’s qualified expenses by nearly $1.7M. This increase resulted in federal credits totaling more than $519k.