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THE APRIL 18TH TAX DEADLINE IS APPROACHING FAST
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May 9, 2024
1 min read
For enterprise companies, tax season is equal parts stakes and tedium. To file an IRC Section 41 R&D Tax Credit at an innovative company, the time expenditure can become especially daunting.
One of the big challenges faced by a controller or a head of tax during tax season is creating and then interpreting an accurate snapshot of all the work completed at a company during a given year. Traditionally, that process takes hundreds of hours: interviews with engineers, surveys, combing through project management system data, and more. That time expenditure was justified because the R&D tax credit is hugely valuable for innovative companies — but certainly, engineers and executives could be creating much more value if those hours were freed up.
“Recently, a controller at an enterprise company shared with me that they spent 150 hours on R&D Taxes alone,” Neo.Tax Head of Sales Ben Eachus says. And that’s before considering the worst-case scenario: an audit means hundreds more hours of labor and possibly burdensome penalties for a company. Think of the value of redistributing those hours toward forward-looking strategy or other tasks needed for the company to succeed.
Neo.Tax’s AI solution connects directly with a company’s existing internal task-level data sources to create an accurate, exhaustive, and audit-proof IRC Section 41 filing.
To learn more about how our groundbreaking technology works, download our White Paper: Leveraging AI in Conducting an IRC Section 41 R&D Tax Credit Study
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At Neo.Tax, we talk to scores of controllers and Heads of Tax every month. One thing is clear: the old way of filing for R&D Tax Credits has become a burdensome pain. You’d think that so many businesses moving their project management and payroll online, via software like Jira, Rippling, and Workday would simplify the filing process. But, in some ways, it’s made it harder.
The payroll and project management output is a rich dataset, but it’s also, well, voluminous. If that data is not inputted perfectly—and let’s be honest, it never is—that means it’s up to a controller or Head of Tax to sift through the mess to create the filing. Engineers need to be trained (and retrained) on the correct project tagging process, and then cajoled to sort out any inputting errors. It’s a waste of time for your filer and your engineering teams.
Which is why Neo.Tax created our AI system.
No one starts a company because they’re excited about accounting and taxes. Well, no one except the Neo.Tax founders :)
But for those other 99% of founders, here’s a cheat sheet and guide to ASC 350-40, an accounting guideline that pertains to Internal-Use Software Development Costs. Maybe you’ve never heard of ASC 350-40, but you should get to know the rule if you ever plan to go public.
