Maximizing Returns on Your Process and Procedure Investments

$7.6 Billion in Tax Credits: A Golden Opportunity

In September 2004, President Bush signed a $146 billion tax cut bill, which included the reinstatement of the previously expired business Research & Experimentation Tax Credit. The 18-month renewal of this tax credit, which had expired on June 30, 2004, was the most costly item, with an anticipated cost of $7.6 billion through 2014.

Process Improvement: A Qualifying Factor

If your organization is investing in initiatives such as ISO 9000, six-sigma, lean manufacturing, TQM, or any other program aimed at enhancing your products or processes, you could be eligible for this tax credit. This includes expenses related to software purchases, training courses, labor, and the acquisition of any Policies, Procedures, and Forms products or services.

A Direct Source of Cash

This tax credit is a direct dollar-for-dollar reduction against your tax liability, not a deduction. You can deduct all costs in the year they were incurred. Furthermore, these regulations are retroactive, allowing you to claim a refund for previous years.

Eligibility Criteria

To qualify for this tax credit, your research must meet five basic requirements:

• New or Improved Product, Process, or Software: The research must aim to enhance a product or process, such as the development or improvement of a formula, invention, or technique.
• Technological: The research's objective must be to discover technological information, based on principles including computer science or engineering.
• Research Involves Uncertainty or Risk: The research must involve uncertainty or risk associated with the design or method of design achievement, excluding general business risk.
• Experimentation Process: The research must be well-documented and include both failed and successful efforts.
• Permitted Process: The activity for product or process improvement must relate to a function, performance, reliability, or quality.

Claim Your Tax Credits Now

Now is the perfect time to invest in ISO auditor training, well-defined process training, business process consulting, or to maximize the value of a useful tool like the Management Procedures Value Series. Tax credits may expire again later in 2005, so act before it's too late.

For more information on the Research & Experimentation Tax Credit, visit the IRS website. For more on process improvement initiatives, check out resources from ASQ and Bizmanualz.