About the Company
The company is a private, fourth-generation family-owned injection molding company that researches, develops, manufactures, and distributes custom made supplies for major industrial clients. The contract manufacturer provides clients with ongoing product innovation and manufacturing process improvements through its research and development initiatives.
With headquarters in the U.S. Midwest, the company also maintains some operations abroad.
The current management is led by siblings who inherited the business. Their business strategy involved updating operations, including their fabrication, application and analytics laboratories, manufacturing facilities, and modernizing their financial and accounting processes, which had been handled until then by a small, local firm.
Management hired a controller, the company’s first full-time financial professional, and sought a larger accounting firm with more sophisticated, multi-national capabilities. The new controller had previous experience with R&D tax credits and conferred with the new accounting firm, which agreed that the company might qualify. The firm had worked with PMBA on other client engagements and subsequently made the recommendation.
The client was aware of PMBA’s national presence and heard Peter J. Scalise, head of PMBA’s National R&D Tax Credit Practice, speak at conferences, and present accredited courses for the CPA firm community. Because of this sense of confidence and familiarity, the company explored their qualifications with PMBA’s support.
The Results/Benefits
A number of the company’s activities were deemed eligible, and PMBA worked with management on both its federal and state R&D Tax credit claims. The company was awarded tax credits far beyond its initial expectations. And even though the state initiated an audit, PMBA supported the client throughout a six-month audit process within its original fee structure, at no additional cost.
Although PMBA suggested it would support the company in tax court, the client decided to settle the audit as the result was approximately 90 cents to the dollar. The credit still greatly exceeded its initial expectations. And with its qualifications established, the firm has an ongoing R&D tax credit strategy contributing to its growth plans.
According to the company’s controller, “As a smaller client, the degree of service we were provided by PMBA — especially when defending their work — was incredible. It was a full-throated, top gun defense. In fact, Peter Scalise quoted the state statute verbatim in conversations with the auditor and placed our activities in the regulations’ context. It was impressive. We never felt that it was too much of an imposition for PMBA to go the extra mile.”
To determine your manufacturing or contract manufacturing firm’s qualifications for federal and multi-state R&D tax credits, contact the PMBA National R&D Tax Credit Services team at R&Dincentives@PMbusinessadvisors.com. To learn more about PMBA’s National R&D Tax Credit Service for manufacturing and other industries and to see whether your state offers credits click here.
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