Companies that specialize in the Credit for Increasing Research Activities (also known as the R&D tax credit) sell hard to our clients. During tax season they are online looking for businesses who may qualify for this credit—especially startups. They cast an extremely wide net that has the potential for a lot of bycatch. While it’s true that the R&D credit is often overlooked by small businesses and their return preparers, it’s not as easy to qualify for the credit as some of these companies want small business owners to believe. Savvy tax professionals can help to ensure that their qualifying business clients receive the benefit of this credit while avoiding situations that would make them ineligible for it.
Assessment Statutes and Document Retention Best Practices
Amber Gray-Fenner, EA NTPI Fellow USTCP
When it comes to document retention, my guiding policy is “If I don’t keep it, it can’t be stolen or subpoenaed.” That sounds cynical, but there’s truth in it. The smaller your data “surface area,” the less you have to manage in the event of a data breach (or, if you hold paper documents, in the event of a fire or break in). And, if a client or former client gets really sideways in divorce or criminal court, being able to say “I have a policy in place and I don’t keep records longer than three years” can provide you with a measure of peace. But what should your policy be? It depends, but relevant assessment statutes are a good place to start. This article reviews the IRS rules for assessing tax and provides some best practices for developing document retention policies for return preparation documents in your practice.
