Making the R&D tax credit work for you

alliantgroup’s Bridgette Brashear outlines how the AV industry can benefit

The experiences that technicians and specialists create for concert fans, stadium attendees and bar patrons are impactful, even magical. But, your hours spent rigging or balancing the stereophonics and perfecting the design and engineering of an automated light scheme, broadcasting compounds or multiplexing, are likely unnoticed by the general consumer. We know that is a testament to your work.

You should know that your industry and your efforts to further it are rewarded by the U.S. federal government. If you’re wondering why the U.S. government is paying attention, it’s because the health of the economy is banking on the success of cutting-edge markets that straddle creativity and technical precision: A/V embodies that perfectly.

If the words “research and development” don’t strike a chord with you, you’re not alone. If you’re not familiar with the tax definition of “R&D,” you’re also not alone.  Over three decades ago, lawmakers recognized the economic impact of global competition and created a business tax incentive that identified innovation as a key driver of economic growth.

The Research and Development (R&D) Tax Credit encourages progressive business practices. This doesn’t just mean lab coats and beakers. It’s much broader than most people assume.

How does it work? If your business is improving a product, process, technique, software or formula (which, for most A/V integrators, translates into routine, everyday undertakings)—the IRS will reward you with a potentially significant reduction to your tax liability. You don’t have to reinvent the wheel to qualify for the R&D Credit, and it could be retroactive to three or four years, often resulting in a major financial reimbursement.

To share an example of just how applicable this is to the field of A/V integrators, a company specializing in audio, video and lighting design/installation was contracted to regularly produce the technical direction and broadcasting for a professional sports team. Of their many qualifying activities, the integrators routinely determined the optimal strategy for transmitting audio and visual signals for streaming, and designed the floor plan, rigging and lighting before each game. All of these tasks were new processes to create a better experience.  And thanks to the R&D Credit, the company was able to claim four years’ worth of federal tax credits for these new efforts, totaling $239,625.

A/V integrators are in the business of creating new sensory experiences, and to accomplish that, they need to invest in quality talent, material, training and experimentation—the exact sort of investments the R&D Credit was designed to reward.

Bridgette Brashear is a director at alliantgroup based in Houston, Texas.