Technology Review: Q&A: Paul Otellini
Governments are best positioned to fund basic research. But there's been a decade-long erosion in the amount of that funding. It's now on a path to grow, and eventually the goal is to double it. But it takes a long time to do that. Secondly, we would like to see the R&D tax credit made permanent and returned to levels that are competitive with the rest of the world. Lastly, we have corporate tax rates that today are the second highest in the industrialized world.
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Stephen, even if R&D tax credits are made permanent, there are two significant issues with the existing R&D Credit regs.
First, the regs are difficult to follow without a thorough understanding of the tax law. This often requires qualified US manufacturers to hire outside consultants to guide them through the details. Unfortunately, the cost of consultant support has made it prohibitive for many small to mid-sized manufacturers to benefit from these federal incentives. Today, tens of thousands of these manufacturers have historically bypassed this valuable tax credit.
Second, in 2008, the IRS elevated the R&D Credit to a Tier 1 Issue, which has put more emphasis on the need for contemporaneous documentation. To defend the R&D Credit in an audit, a taxpayer needs to qualify every R&D project under the regulations, AND identify costs associated with the project while the costs are being incurred (known as nexus). This documentation requirement is burdensome on engineers and production management staff, which makes capturing and defending the Credit a challenge for most manufacturers.
To address both these issues, we built Titan Armor – a low-cost software solution that helps manufacturers meet the current regulatory requirements for the R&D Tax Credit. You can get more information at www.titanarmor.com.
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