Plastic processors produce specialized parts utilized in virtually every industry, and this requires molding industry companies to constantly improve their technology and processes. Plastic injection molding companies spend significant resources, not only in materials and components, but also in the development of its unique manufacturing processes that are specific to the customer’s part. Processors consider, evaluate, and test (sample) numerous variables in order to eliminate design uncertainty related to the part-specific production process, which are all likely to qualify as research and development activities.
Many of these companies are unaware that their business activities may qualify as research and development (R&D) activities that can allow them to claim significant federal and state income tax credits. Moreover, some may be already claiming the R&D tax credit, but may not be claiming the appropriate amount of credit.
Since 1981, the Credit for Increasing Research Activities (“R&D Tax Credit”) has incentivized companies of all sizes to invest in innovation, product development and improvement, new technologies, improved processes, new or improved software, new techniques and/or formula development. In addition, approximately 35 states also provide tax credit incentives for qualified research and development.
A Rainbow of Activities
Examples of the most common types of qualified activities for plastics processors include, but are not limited to:
- Developing new part design designs for manufacturability;
- Developing new mold designs;
- Improving functionality, performance or reliability, of a production process;
- Rapid prototyping or 3-D models aimed at eliminating uncertainty related to a prototype design;
- Modeling (including 3-D models) new tool designs;
- Mold fill analysis to predict the fill of the part;
- Performing experimental testing or sampling new tools;
- New materials or resin testing; or
- PPAP or FAI on new parts / molds / designs.
Claiming the Credit & Supporting Documentation
Because claiming federal and state credits and incentives requires a detailed study that includes both quantitative and qualitative substantiation, Monetek provides a team of experts with decades of experience to decrease your tax liability. We actively partner with businesses and their CPA firms to ensure effective utilization and maximum client satisfaction.
For more information about how your company can benefit from the R&D tax credit, please contact Robin LeBlanc at 248.466.0766.