TCC helped the client overcome what it had perceived to be an insurmountable hurdle: establishing a sampling methodology to review hundreds of contracts to determine rights and risks.
Our clients say:
“Is the juice worth the squeeze? It’s a question we’re always asking. In this case, it really was, but it took TCC to deliver it!”
Centered on developing advanced technologies for the US military, this taxpayer clearly engaged in a certain level of research. However, they had never claimed an R&D credit due to a negative experience with another firm. Their primary concern was how to develop a reliable methodology for contract review to determine whether they retained the requisite rights and risk to the research. Compounding this challenge was the issue of “cascading” agreements, where the taxpayer, as a sub-contractor, often contracted with prime contractors who had different agreements with their end-customer. This sometimes impacted the sub-contractor arrangement.
- TCC staff attorneys reviewed a sample of the agreements to assess a potential range of benefit and to establish a reasonable sampling method.
IRS Practice and Procedure Expertise:
- Comfortable with the proposed methodology, and at TCC’s recommendation, the taxpayer applied for and was accepted into the IRS Pre-Filing Agreement (“PFA”) program. After explaining the methodology to the IRS, the IRS approved the full refund within 120 days. As part of the PFA, the methodology was rolled-forward to the next four years.