Industry: Steel Pipe Manufacturing
Number of Employees: 100+
Commonly Qualifying Tasks:
- Engineering and designing new products
- Materials analysis, evaluation and selection
- Physical and chemical properties testing
- Designing products for better performance, tensile strength and optimal elemental composition
- Development of customized capital equipment
A steel manufacturing firm was evaluating the possibility of taking an R&D credit. While the company itself sold many products much of their ongoing offerings were designed in years prior, far outside the scope of any possible retroactive credit filings leading to amendments of their tax returns. This led them to believe that the credit would not be a very lucrative opportunity. However, upon reviewing the regulations, the company realized that while they did not design many new products, they did constantly improve their production process which was another activity that would qualify for the R&D tax credit.
Upon reviewing their activities, the company saw a small group of qualifying employees that worked strictly on new product design. This team was responsible for creating new profiles and dimensions to expand their company’s product offerings. Some of their qualifying activities included product design, structural engineering, process development, design for manufacturability and conceptual development. This team also had the benefit of capturing a lot of documentation necessary to sustain the credit including extensive requirements and specifications documents, detailed design drawings and renderings, and testing reports.
On the production side, the company identified individuals across several departments. First, in production, they had several supervisors who managed the three shifts of laborers that worked throughout the day. Each of the teams had their own process improvements efforts that were guided by these supervisors which included making processes more efficient by reducing waste, making production processes more reliable by reducing the number of bad parts, increasing throughput, automation efforts, and making modification to processes to replace source materials. Though the documentation was slimmer on the production side, the company was still able to record the work that they were doing through interviews with the supervisors themselves who detailed the progress of ongoing specific internal research and development projects.
The steel manufacturing credit study yielded a credit in excess of $300,000 for the federal and California calculations.
