Will Applying for the Research and Development Tax Credit Get My Company Audited?

The most frequently asked question by business owners before starting the research and development tax process is “Will I be audited?” or “Will this make me a target of the IRS?” In short, no, and this is for a few reasons of which I will explain in this article.

Since 2008 the IRS will give companies a reduced credit recovery at the benefit of not having to produce impeccable records. Therefore the Alternative Simplified Crediting method (ASC) is a safe and reliable way to recover R&D expenses.

The ASC method is like applying for a mortgage. An IRS agent must review every R&D tax credit application. As a result, the credit recovery process can take 90-120 days for approval. However, once approved, then and only then is a check mailed back to you and your company. The likelihood that the IRS would refute their prior work or audit you and your company is quite unlikely. 

“95% of the businesses that qualify for the research and tax development tax credit do not apply.”

Self-censorship is the main reason that 95% of businesses that qualify for the research and development tax credit do not even apply. Because of this, the IRS is not concerned about fraud. If very few companies are taking advantage of this program, then the bar threshold for fraud is quite low. In addition to this, a yearly budget of $12 billion is apportioned for this program from Congress. As a result, if large portions of the budget are not being maximized, then fraud is not a concern.

Reasons Why the R&D Tax Credit will not make me a target of the IRS…

- The IRS reviews each application before any credits are issued

- 95% of business that qualify do not apply for the R&D tax credit

- $12 billion are apportioned to this program from Congress yearly and are currently not being maximized

In summary, when applying for the R&D tax credit program through Medical Incentive Advisors, you can rest assured that you will not become a target of the IRS. Our Consulting Agreement and Engagement Letter states that we will defend our work. Furthermore, Medical Incentive Advisors has not had a single client yet get audited. Our team of CPAs has even proactively helped clients fix their tax filings before sending in their application to the IRS. If you are interested in learning more, please contact us today!