Congress created the Research & Experimentation credit program in the 1980s to provide an incentive for companies to engage in research and to level the international corporate playing field. While President Bush would like to make the credit permanent, the results of a survey by Big Four firm KPMG suggest that the credit program is not as successful as Congress may have envisioned.
According to the survey, approximately two-thirds of those companies applying for the credit lose as much as 80 percent of the credit in part due to complications in gathering, identifying , and storing the proper documentation required for claiming the credit.
KPMG's Jim Eberle, partner in charge of the firm's R&E group, suggests that a technological-based solution that automates the necessary collection of data would aid tremendously in securing the proper credit for companies.
"Many R&E credit opportunities lie outside a normal research environment - for example, on a factory floor - making them difficult to uncover or document," Mr. Eberle said in a KPMG press release this week. Solutions such as just-in-time Web-based surveys or other automated processes "may be the best route for more organizations to take full advantage of this credit," he said.
Two-thirds of survey respondents agree. KPMG interviewed 175 corporate tax directors for the survey. Seventy percent of those surveyed responded that their companies have no Web-based information gathering tools in place to help with the R&E credit.