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RESEARCH & DEVELOPMENT TAX CREDIT

YOUR INNOVATION MAY BE WORTH MORE THAN YOU THINK.

  • Only 33% of Businesses THAT QUALIFY Actually Claim It!
  • It was Estimated, in 2024, $50 Billion of R&D Tax Credits Went Unclaimed
  • 85% of the R&D Tax Credit Are Utilized By Large Corporation Because Smaller Companies DO NOT KNOW THEY QUALIFY
  • If You Missed the Credit in the Last Three Years, IT IS Not Too Late
  • Prior to the OBB, businesses MUST amortize R&D Expenditures, By Not Claiming the R&D Tax Credit, Businesses are Increasing Their Tax Liabilities without the Benefit of Significant Tax Credits Savings
  • Many Companies Invest in Developing Products, Improving Processes, Solving Technical Problems, or Create New Technology Without Realizing Those Activities May Qualify The Business For Valuable Tax Incenntives.
  • Even Startups That Have Not Had Profitable Year May Qualify

What Are the Benefits of R&D Tax Credits?

There are great advantages that R&D Tax Credits can offer a company, including:

Tax savings

The primary benefit of R&D Tax Credits is the tax savings they provide. Companies can use these credits to offset their income tax liability, reducing the amount of taxes they owe.

Cash flow

R&D Tax Credits can also provide a cash flow benefit for companies. If a company has more credits than taxes owed, it can carry the credits forward or back to offset taxes in other years

Opportunity for innovation

By providing tax incentives for R&D activities, the government encourages companies to invest in new technologies and processes, which can lead to innovation and growth.

Competitive advantage

Companies that invest in R&D activities may gain a competitive advantage by developing new products or services, improving existing ones, or reducing costs through innovation

Job creation

R&D activities often require specialized skills and knowledge, which can lead to the creation of high-paying jobs in fields such as science, engineering, and technology

R&D Scenarios

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Your industry

See what qualifies as R&D in your industry

Over 1,000 businesses claimed credits last year for activities they were already doing. Select your industry to see examples.

What Software/Technology Development Activities Qualify?

Many software developers perform activities that qualify for the R&D tax credit without realizing it. Examples include:

Designing and developing new or improved technologies, algorithms, applications, or databases
Programming code
Designing and developing software architecture
Developing operating systems and compilers
Creating mockups, UX design, or technical design work
Testing automation to ensure quality during development
Establishing functional relationships between software modules for internal use or to serve clients better
Compiling, programming, and testing software source code
Developing feature enhancements
Improving internal processes and conducting QA testing during development
IRS tax regulations outline a straightforward 4-part test that creates a fairly low bar for qualification.

Our Steps to R&D Success

We work with your team to identify potential activities, understand underlying work, and determine which eligible expenses

01

Getting Started

Meet with a member of our team to receive an overview of the R&D Tax Credit and review your eligibility. Our team will detail the documentation needed.

02

Initial Assessment

Our team will use this information & data to estimate what credit you are eligible for and establish an optimal claim timeline. If no credit is identified, there will be no cost for you!

03

Comprehensive R&D Study

Our technical consultants will determine the list of qualified R&D projects according the 4-part test while our tax consultants will work with you to ensure that the Qualified Research Expenditures (QREs) are accurate.

04

Report Writing & Finalization

Legacy’s team of Tax and Technical experts will work together to complete the calculations and provide your deliverables, including a detailed technical report and supporting documentation.

05

Receive your Benefits

After filing the proper documentation with the IRS and State, the R&D Tax Credit will reduce your income tax liability in the current tax year and refund for the previous 3 years. Any remaining credit can be carried forward up to 20 years.

06

R&D Study Review

Review your R&D Study Report with our Tax and Technical experts for the next year to increase efficiencies for future claims.

Are All Industries Eligible for the R&D Tax Credit?

R&D Isn't Limited to Scientists in Lab Coats!

The R&D Tax Credit is not limited to a specific industry. It is an activity-based tax credit. If a company’s employees or contractors are physically working in the U.S. or U.S.-controlled territories and meet the requirements of the four-part test, then you may be eligible, pending other criteria. Below are industry-specific examples of activities your organization may be doing that could qualify for R&D tax credits:

Technology and Software Development

⦁ Integration of new and legacy systems
⦁ Design and testing of systems, such as hardware or software
⦁ Modification of existing systems and processes to improve performance, scalability, security, or throughput
⦁ Improvements to off-the-shelf solutions to meet the needs of the taxpayer’s environment

Industrial Manufacturing

⦁ Design, construction, and testing of prototypes or pilot models
⦁ Development of new construction or processing techniques to improve reliability in the manufacturing process
⦁ Development of new techniques to address health, safety and environmental concerns
⦁ Attempts to minimize product failure in the production process

Life Sciences and Pharmaceutical

⦁ Experimentation with new or alternative materials or reagents into existing processes
⦁ Development of new or improved informatics or analytical tools
⦁ Clinical trials
⦁ CRO activities

Financial Services

⦁ Integration of new platforms with in-house developed software
⦁ Development of new trading platforms
⦁ Integration of new financial products (e.g., crypto) into new or existing applications and systems
⦁ Financial modeling and the development of new algorithms

Food and Beverage

⦁ Test kitchen activities
⦁ Development of new packaging techniques
⦁ Attempts to improve manufacturing processes

Energy Organizations

⦁ Design and development of networks and systems to monitor energy capacity transmission
⦁ Development of new and improved batteries
⦁ Development of new biofuel production techniques

Architecture

⦁ Developing innovative design processes to enhance efficiency or sustainability
⦁ Creating software tools to streamline building design and construction workflows
⦁ Implementing advanced modeling techniques for structural analysis or energy performance optimization

Engineering

⦁ Researching and developing new materials for use in aerospace, automotive, or electronics industries
⦁ Designing and testing prototype systems for improved product performance or safety
⦁ Innovating energy-efficient technologies for renewable energy systems or smart infrastructure

R&D Frequently Asked Questions

The R&D Tax Credit is a federal tax incentive that rewards businesses for developing or improving products, processes, software, or technology. It can reduce a company’s tax liability dollar for dollar.

No. You do not need a laboratory, patents, or a dedicated R&D department. Engineers, developers, technicians, and other employees performing qualifying development work may qualify.

 

Companies in software, manufacturing, engineering, architecture, construction, food and beverage, agriculture, life sciences, aerospace, and many other industries may qualify.

 

R&D activities qualify across far more of the economy than most firms assume. Manufacturers refining processes. Software shops iterating on architecture. Engineering firms working through new designs. Food and beverage companies developing new formulations. Specialty trades doing engineered solutions. Life sciences, agriculture, biotech, and architecture all commonly qualify.

 

The shorthand: any client doing technical work to develop or improve a product, process, formulation, or system — and bearing some uncertainty in how to do it — is worth investigating.

Possibly. The contract and the parties’ financial risk and rights to the research must be reviewed to determine who can claim the credit.

Yes. Developing new software or improving existing software can qualify when the work involves technical uncertainty and experimentation.

 

Yes. A project does not have to succeed or reach the market. Failed prototypes, abandoned projects, and unsuccessful experiments may still qualify if the underlying work meets the R&D requirements.

Our R&D tax experts are degreed professionals. The company’s R&D tax expertise is in-house and it is our core discipline, led by Charles Riggs, a practitioner with Big-4 R&D credit experience, and over a decade of experience in the work. The company’s software systems which are developed to embody that expertise, are built by Trevor Paesl, a senior software engineer and product developer with nineteen years of experience developing enterprise-grade, security-certified software systems.

 

Charles Riggs, co-founder and CEO, has personally performed R&D tax credit studies for over a decade. Trevor Paesl, co-founder and COO, has headed up research and development operations in industry since 2014, and has been highly involved as an R&D credit recipient for several years.

Charles Riggs, co-founder and CEO, has personally led the work on more than a hundred R&D tax credit studies, beginning while working at a Big-4 accounting firm, and up to building and running his own R&D specialty consulting practice for several years.

In the United States, by our own specialists. No subcontracting. Nothing is sent overseas.

Proposed fees are set based on market rates for the service and the scope of the study, which includes study time period, business components, substantiation complexity, control group size, etc.

Yes, we provide audit support at no extra cost to our client. We assist or partners and client to respond to R&D tax credit-related information document requests (IDRs), and supports in production of additional substantiation as requested by an examiner. Legal representation before the IRS remains with the client’s licensed preparer.

Yes. The R&D specialist team is consistent, Charles Riggs leads it, and the specialists who build a study are the ones who support the client through it and defend it if it is examined.

Activities generally need to involve developing or improving a product, process, software, technique, or design while resolving technical uncertainty through experimentation.

Qualifying activities generally must:

  • Have a permitted purpose
  • Be technological in nature
  • Address technical uncertainty
  • Include a process of experimentation

The original FAQs use these four criteria as the main eligibility framework.

Examples generally include routine quality control, market research, purely cosmetic changes, research outside the U.S., simple duplication or adaptation, and certain funded research.

The main categories are:

  • Employee wages
  • Supplies and materials used in R&D
  • Qualified contractor research expenses
  • Certain cloud-computing or development-environment costs

The source specifically groups qualifying expenses around wages, supplies, and contract research.

Yes. Certain payments to U.S.-based contractors performing qualified research on the company’s behalf may be included.

Yes. Materials consumed during prototyping, testing, experimentation, and development may qualify when connected to eligible R&D activities.

It depends on your qualifying expenses, calculation method, and prior-year activity. The source estimates federal credits commonly around 6–10% of qualifying research expenses, although each company is different.

Yes. Smaller businesses can generate meaningful credits when they have qualifying R&D activity and expenses.

Yes. A company can generate R&D credits even when it does not currently owe income tax. Unused credits may generally be carried forward.

Yes. Certain Qualified Small Businesses may be able to apply R&D credits against payroll tax liabilities rather than waiting until they become profitable.

Under the information in your FAQs, qualifying small businesses may be able to apply up to $500,000 per year against payroll taxes, subject to eligibility requirements.

Depending on the situation, it may reduce:

  • Federal income tax
  • Payroll tax for qualifying startups
  • Certain state tax liabilities

Generally, no. It is primarily used to offset tax liability. However, qualifying startups may use the payroll tax provision, and some states have refundable or partially refundable programs.

Yes. It can be claimed in every year your company performs qualifying R&D activities.

Often, yes. Open prior tax years may be amended to claim credits that were previously missed.

A multi-year study reviews multiple open tax years at once so a first-time claimant can potentially recover credits from prior years as well as establish the credit going forward.

 

The FAQs generally describe a three-year amendment window, although the exact statute depends on when the return was filed and the company’s circumstances.

Generally, you cannot obtain a new refund once the amendment statute has expired.

Federal credits can generally be carried forward for up to 20 years.

The best practice is to claim it with the timely filed tax return, including extensions. Certain elections — especially payroll tax elections — may require a timely original return.

No. According to the supplied FAQ material, the Section 41 R&D Tax Credit itself did not expire on July 6, 2026. That date related to special retroactive Section 174A relief for certain taxpayers, not the general R&D credit.

You provide information about your business, qualifying projects, employees, expenses, and tax years. The study team reviews the information, calculates the credit, and prepares supporting documentation.

Common documents include:

  • General ledgers
  • W-2 wage summaries
  • Employee lists and job titles
  • Federal and state tax returns
  • Relevant contractor agreements

The process is designed to require minimal involvement beyond providing information, documents, and participating in key discussions.

Most studies move from kickoff to completion within a few weeks, depending on the client’s responsiveness and the complexity of their R&D work. The platform’s structured intake compresses what was traditionally a months-long interview process into an asynchronous workflow that fits inside your client’s normal calendar.

 

Studies typically finalize well inside the relevant tax cycle.

Yes. Questions can be skipped and completed later, and progress can be saved throughout the study.

You receive the calculated credit, supporting calculations, documentation, and an audit-ready study report. Your tax professional can then file the credit on the appropriate return.

Yes. The R&D study can be completed independently, with the documentation and instructions provided to your existing tax preparer.

According to the supplied FAQ, the study operates on a contingent-fee basis: the fee is based on the credit identified, and if no qualifying credit is found, there is no study fee.

Everything required to deliver the study, including:

 

  • Opportunity discovery and credit sizing across your firm’s whole client list.
  • R&D specialist support to each of your clients, every step of the way.
  • AI and human study review against tax code, case law, and IRS guidance.
  • Substantiation and documentation — audit-ready from the day the study is completed.
  • Filing support — your firm files; we supply everything the return needs.
  • Audit defense — if it is ever needed, by the specialists who built the study.

 

The only items handled separately are occasional direct costs — for example, postage for the optional co-marketing feature — at cost.

Most platforms in this space were built one of two ways: software-only, with the specialist work outsourced; or specialist-firms with a thin software wrapper. Neither structure produces what firms actually want.

 

Our process was built deliberately as software and specialists together — neither subordinated to the other. The platform calculates and reviews; the specialists support clients personally and verify each study. It’s a different shape from anything else available, because no other team had both halves of the founding expertise.

 

We don’t expect prior bad experiences to disappear on hearing this. We expect to earn the second look on the work.

Hiring an in-house R&D specialist takes 6 to 18 months and several hundred thousand dollars in fully-loaded annual cost — for a single specialist who, even at full utilization, can only deliver so many studies a year.

 

Through our platform, your firm can deliver the same volume of work without the hire, the recruiting cycle, the management overhead, or the risk of losing the specialist after two years. Your firm captures most of the per-study economics. And there’s no commitment — if your firm later decides to bring this fully in-house, there’s nothing locking you in.

Claiming a legitimate and properly documented R&D credit does not automatically trigger an audit. Strong documentation is important if the IRS reviews the claim.

The study documentation is designed to support the claim, and the supplied FAQs state that audit support is included with the engagement.

Audit defense is included. If a study is ever examined, the same specialists who built it handle the response — preparing the substantiation, drafting the position, and working through the audit alongside the client. Your firm doesn’t carry the technical-defense burden.

 

Substantiation isn’t bolted on after the fact. It’s documented as the study is built — meaning the study is audit-ready on day one. The standard isn’t will this look fine? It’s will this hold up if it’s examined?

A study documents both the financial calculation and the technical basis for the credit, helping substantiate the claim if it is reviewed.

According to the supplied FAQ, information is encrypted in transit and at rest and is accessible only to authorized members of the study team.

The supplied FAQ states that calculations are guaranteed against study errors up to the stated guarantee limit.

Increased scrutiny is precisely why audit-readiness is built into the platform from the first step — not bolted on at the end. Each study is calculated against the current tax code, reviewed by AI against prior case law and IRS guidance, and verified by human R&D specialists.

 

Substantiation is documented as the work is done, against the standards a Big-4 R&D practice would hold itself to.

 

This is also why the same specialists who build a study handle its defense. The work is built to a standard that holds up; if scrutiny comes, the substantiation is already there.

Three reviews, in order:

 

  • Software-calculated. Each study is computed against the current tax code by the platform, removing arithmetic and human error.
  • AI-audited. Studies are reviewed against prior case law, IRS guidance, and prior audit outcomes — flagging gaps, weak claims, and inconsistencies before the study is finalized.
  • Human-verified. R&D specialists review and sign off on each study, applying judgment in the places software and AI can’t.

 

The combination is more rigorous than any single layer alone. The result is a study substantiated to the standard the IRS would expect to see.

Section 174 deals more broadly with research and experimental expenditures, while Section 41 determines which qualified research expenses can generate the R&D Tax Credit.

The tax treatment of research expenses has changed in recent years, including capitalization/amortization requirements and later changes affecting domestic research expenditures.

According to your FAQ content, OBBBA introduced Section 174A, restored immediate expensing for qualifying domestic R&D beginning after 2024, and created temporary retroactive relief provisions for certain small businesses.

It allows taxpayers to take a reduced R&D credit while generally preserving the full research expense deduction, rather than reducing the deduction by the full credit amount.

No. A taxpayer can choose between the reduced-credit election and the alternative tax treatment, depending on which produces the better result.

Yes, but tax rules prevent receiving a double benefit on the same expenses. Section 280C determines how the deduction and credit interact.

According to the supplied content, it is generally made on Form 6765 with a timely filed original return.

The FAQs identify situations such as loss years, certain payroll-credit situations, and states that do not conform to federal treatment. The best option should be modeled based on the taxpayer’s circumstances.

The supplied material highlights two important decisions:

  1. The Section 280C election
  2. The payroll tax offset election for qualifying small businesses

The source itself separates these as two post-study tax decisions.

The CPA remains the client’s primary tax advisor. The R&D specialists perform the specialized study and provide an audit-ready package for the CPA to file.

No. The R&D team handles the technical qualification analysis, calculations, documentation, and study work.

Minimal additional work is required. The partner generally maintains the client relationship and handles the filing while the specialist team handles the R&D study.

After the introduction, the R&D team handles the engagement from initial scoping through the final deliverable while keeping the referring firm informed at key milestones.

The supplied FAQ states that client information remains confidential and is not used in marketing or case studies without permission. NDAs can also be signed when requested.

The specialist team can support portfolio companies while allowing the existing tax preparer, CFO, wealth manager, or advisory team to maintain the primary relationship.

Each engagement produces calculations, technical narratives, workpapers, forms, and supporting documentation designed to substantiate the credit.