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Does Uncle Sam Owe You Money?

specialized-tax-services-tax-credits-and-refundsMany businesses are missing out on tax credits and overpaying income and local property taxes due to improper allocation of building component costs that depreciate faster than a building’s structural components.

An in-depth engineering and accounting study can properly allocate these costs and result in substantial cash recapture of tax overpayments.

Others may have also overpaid for workers compensation insurance, waste and various utilities, supplies, and vendor costs due to billing errors, unclaimed discounts, and other sources of overpayments.

Even financially sound businesses should want to recover these overpayments – and those experiencing cash flow pressures even more so.

Cash Flow Stability First

If your business is in fine fiscal shape, this will be of lesser importance to you. But if cash flow is a problem, the first objective is to get that in order so you can evaluate and execute your business strategy without feeling there’s a gun to your head.

Thus is why we recommend focusing first on your financials.

Once it’s determined which cost recovery programs your business is eligible for, you can authorize the relevant experts to undertake the needed study(ies) and consider whether you’re ready to analyze your other operating costs and practices.

Depending on those results, we’re available for further help implementing the changes needed to achieve recurring operating savings and revenue enhancements with a more aggressive marketing and sales program. These opportunities are reviewed further in our Profit Strategy Consulting discussion.

First things first, however – and that’s making sure you can meet your short-term financial obligations.

No Savings, No Fee

Our risk-free cost recovery programs are designed to determine whether your business is eligible for any of a dozen or more auditing programs proven to generate refunds and other cash infusions for the majority of firms studied.

These include research and development (R&D) tax credits that are even better than tax deductions because 100 cents of every tax credit dollar falls to your bottom line and is recaptured as cash flow for your business.

Most big companies eligible for these credits already take advantage of the. But most mid-size and smaller companies do not. -either because they’re confused as to what activities are eligible for these credits or intimidated by the documentation required to claim them (see this article in Bloomberg Businessweek for more on this, and this more recent article for a broader overview of R&D tax credits).

What makes this opportunity especially attractive is we’ve teamed up with the various expert disciplines required to conduct these studies – engineers, accountants, auditors, etc – to examine your business’ eligibility for one or more of these cash recovery programs at no up-front cost to your business. They bear the risk for study costs necessary to document your eligibility – which can be extensive with the weeks of professional services required.

Roughly 4 out of 5 businesses qualify for such cost recoveries – an even higher percent when all of them are considered. Those who don’t, however – usually because the amounts to be recovered aren’t sufficient to justify the expense required – at least won’t bear the substantial costs of investigating the opportunity for their businesses. Fees for these professional services are provided on a contingent basis and are only payable if sufficient savings are found for your business.

These services can include engineering studies of building components for property-owning businesses that pay taxes – or leasehold improvements over $250,000 if your business rents space – to more precisely allocate building components. These are called cost-segregation studies and generally result in increased personal property categorizations that can be depreciated more quickly than a company’s real (land and structural) property – thereby increasing your business’ annual expenses for accounting purposes and reducing your tax obligations.

You may be able to look back a number of years and find you’ve been overpaying both federal and state income taxes – as well as local property taxes – based on overstated real property costs and understated personal property costs.

Here are some companies that have benefited from this process…

cost-recovery-clients

Pay Only What You Owe

Many businesses have fallen victim to this misallocation of assets because of lack of engineering expertise and/or excess timidity about dealing with the IRS – which has issued some very detailed guidance for this process that should be followed for maximum benefit and security.

The net result of a properly executed engineering-based study that fully complies with IRS requirements can be an infusion of cash flow in a few months time. Other audits of energy, communication, freight, and similar operating costs can yield cash recoveries even sooner – some in weeks rather than months.

The obvious question here is why WOULDN’T a business want to examine its past expenses for such overpayments – especially when they can do so without risk of worsening their cash flow by doing so?

There is a requirement of time, however. Someone on your staff – usually your accountant or bookkeeper – will have to supply these outside professionals with the necessary data and documentation to determine whether and how much your business is eligible to recover. That should go without saying, but bears mentioning in case that’s an issue for you.

Before that, however, a preliminary screening with our Business Savings Assessment tool will narrow down your eligibility for one or more cost recovery programs. This can be done by phone in roughly a half-hour, assuming you can provide reasonably correct estimates of your current and past costs. You can follow-up to provide those you’re unable to supply at that time.

If you’d like to explore this option, schedule a time for that assessment by clicking here and selecting one or more times convenient for your calendar. We’ll reply confirming the appointment time and look forward to helping you reclaim any overpayments to which your business is entitled.

For more columns and discussion about tax and cost recovery ,
see our Cost Recovery posts.

And to get your Free & No-Obligation
30-second Tax Savings Estimate, click here.

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