Turning Research into Tax Savings
PSTS helps businesses across a variety of industries—software, engineering, manufacturing, architecture, biotechnology, agriculture, and more—identify and secure valuable tax savings through R&D Tax Credits.
The R&D Tax Credit is a permanent general business credit per IRC Sec. 41 meant to incentivize businesses engaged in innovation or technical activities in the form of a Federal income tax credit. In addition, many state jurisdictions offer R&D Tax Credit programs that either fully or substantially comply with the Federal rules, offering an additional opportunity to offset state business tax liability.
How It Works
The credit is based on defining and capturing the following potentially eligible expenses:
- Wages – employees directly conducting, supervising, or supporting research and engineering
- Supplies – supplies consumed in the conduct of qualified research
and engineering - Contract Labor – outsourced labor such as engineering subcontractors, lab testing, etc.
- Cloud Computing Costs – utilizing cloud-based infrastructure to conduct research (typically software development)
The potential credit benefit generally equates to 7-10% of the total aggregated qualified expenses. For example, a business with $1,000,000 in eligible expenditures would generate a credit of approximately $70,000 – $100,000. This credit is utilized to offset income or payroll taxes dollar for dollar and is claimed on the annual income tax return filing.
PSTS’ Process
Phase 1: Eligibility & Qualification Analysis
We begin every engagement with a thorough assessment of your company’s activities, expenditures, and opportunities.
In the event of an IRS or state examination, PSTS provides full audit support—through the appeals process if necessary—at no additional cost. We stand by our work, prepare substantiation packages, and represent your position with technical clarity and confidence. Our goal is to protect your benefits and give you peace of mind throughout the audit cycle.
- Kick-off Call & Onboarding – align goals, expectations, and timelines with key stakeholders.
- Data Collection – gather financials, payroll records, and project information.
- Discovery & technical interviews – explore your projects, activities, and innovations.
- Risk analysis – identify potential red flags and areas of risk requiring additional support.
- Estimated tax benefit – provide a preliminary calculation of your potential credit.
- Final qualification analysis – apply the IRS four-part test and confirm eligible activities.
- Tax credit forms & reporting – prepare accurate tax forms, elections, and related documentation.
Phase 2: Final Deliverable & Supporting Documentation
Your business receives a comprehensive package designed to both maximize your credit and withstand IRS or state examination.
- Comprehensive R&D tax credit package – detailed reporting and QRE support schedules.
- Best practices & recommendations – guidance on recordkeeping, documentation, and future-year planning.
- Feedback & follow-up – ensure clarity, answer questions, and refine processes for future claims.
Phase 3 (if necessary): Audit Support & Appeals
In the event of an IRS or state examination, PSTS provides full audit support—through the appeals process if necessary—at no additional cost. We stand by our work, prepare substantiation packages, and represent your position with technical clarity and confidence. Our goal is to protect your benefits and give you peace of mind throughout the audit cycle.