Why Tax Recovery Should Be Your Next Strategic Move

Tax Recovery
A Sensible Place to Start

While it’s not enough as a long-term solution to business stagnation, the fastest route to improving your profits is to focus on costs.

That’s because 100 cents of every dollar saved falls straight to your bottom line.

More sales, on the other hand, produce only your profit margin on the bottom line – and if they’re realized via another “Sale!”, you may be lucky to even have a profit margin given the hike in volume you’ll need to offset the discounts.

OK, so cost savings should come first. But that’s never easy, is it? Maybe that’s why so many businesses resort instead to another “Sale” – they’re just easier to pull off.

They’re also perpetuating the endless price wars that are a race to the bottom with your competition. The goal should be to never have – and never need – another “sale”.

Of course, you can’t save your way to growth. There’s only so much you can eliminate by way of waste and avoidable costs.

But it is the fastest way to make a significant impact on your bottom line.

And the EASIEST Place to Start

Some cost savings, however, are easier than others.

And if it’s done right, recapturing tax overpayments to the government may be easiest of all.

You will have to help assemble the documentation needed to prove you’ve overpaid, of course. But that’s a one-time project that’s not especially onerous.

There’s also the cost for the various studies by outside experts – engineers, intellectual property attorneys, recovery specialists – but even that can be mitigated with proven providers that only receive payment if and when they produce savings for your business. No savings, no cost.

So of all the ways available to make a significant six-figure impact on your cash flow and bottom line, none is as easily achieved as a professional cost recovery campaign.

And there’s no better place to start – assuming yours is a tax-paying business – than with prior tax overpayments.

Three Bites at the Apple

Most businesses – more than two-out-of-three – qualify for one or more of three tax savings opportunities.

There are actually a few others some businesses will qualify for, but the three that the vast majority of businesses qualify for – and are missing out on – are…

1.  Property Tax Refunds – Local tax assessments of business properties have generally failed to account for fluctuations in actual market valuations that have left many businesses strapped with inflated assessments and tax payments. These discrepancies can and should be documented and appeals filed with local and, if necessary, state assessing authorities.

The experience advocating for such clients has been an average 15% refund and recurring savings in property tax payments – and sometimes the ability to recover past tax overpayments;

2. Accelerated Depreciation – Most commercial buildings are fully depreciated over 39 years, yet 20-30% or more of their components will require replacement long before then.

These should properly be depreciated over the IRS-sanctioned periods of 5, 7 or 15 years, but most accountants simply don’t have the engineering expertise to conduct the engineering-based cost segregation study recommended by the IRS (which encourages these depreciation errors to be corrected, by the way).; and

3. Manufacturer Tax Credits – Tax credits, of course, are far more valuable to businesses than tax deductions – since 100 cents falls to the bottom line for every dollar of tax credit vs. 30-40 cents per dollar in tax deductions (depending on your tax bracket).

Because the eligibility requirements for these credits have been substantially relaxed (including new IRS rules that took effect in the past year) many more businesses – primarily manufacturers, but also architects, engineers, software companies and more – are missing out on these credits.

Professionals in the field estimate up to 95% of eligible companies aren’t taking advantage of these credits that often reach six and even seven figures – and that can be repeated annually.

All of these are or can effectively be turned into recurring revenue streams for your business. And they don’t require you to change your business operations, trim staff, or launch an expensive advertising campaign.

In fact, you can explore all of them for absolutely no up-front cost, all on a contingency basis.

Watch this brief video for a quick overview and read more below to see if your business can benefit from these overlooked tax savings.

For an instant estimate of your potential tax savings, click here.

Overpaying Local Property Taxes?

Most businesses are overpaying on local property taxes due to either overvaluation or improper allocation of building costs.

And most can recover these overpayments and avoid overpaying in the future.

Properly trained professionals can document these errors and deal with local tax officials on your behalf to assure you pay only what you should.

By the Book Only

It’s important, of course, to do it right. One reason most companies – roughly 3 out of 4 that are eligible – don’t pursue their legal right to tax credits and/or return of tax overpayments is their exaggerated fear of dealing with the iRS and maybe triggering the dreaded audit.

But if you follow their requirements to the letter with a properly constructed and in-depth engineering-based study – in the case of reallocating your building or renovation costs (called a “cost segregation study”) – there should be no need to worry. The IRS respects well-documented studies and actually encourages eligible companies to undertake them -and spells out what they require in doing so. After all, you’re correcting errors and assuring greater accuracy in your tax filings.

And the better firms will defend their work with the IRS at no charge if there were to be any questions about their work.

There’s no shortage of companies who perform these services -though most won’t do so on a contingency basis. With them, you’ll have to foot the bill for the required 4-6 weeks of professional analysis whether they find enough savings to justify the cost or not. That entails financial risk as the study could cost more than you’d recover.

A quick up-front screening survey, however, can determine if you’re at least in the ballpark that’s worth pursuing. It’ll take only 30 minutes literally -to see if you’re eligible for a local property tax refund. And a follow-on 6-question survey taking another couple of minutes will give you an estimate of additional federal and state refunds and credits you may be eligible for.

If it looks worthwhile, a follow-up interview will refine your savings estimate and outline the scope of work needed to meet IRS requirements.

Upon your authorization, you can then have the work performed and wait for the results – which is most often a high five or six-figure check in 2-3 months time.

You Didn’t KNOW
You’re an R&D Company, Did You?

Tax refunds for research and development costs are another area where far too many businesses forego tax benefits to which they’re entitled. And they’re not just white lab coat kinds of R&D most of us think of, but often the routine costs of product manufacturing and process improvements you’d never suspect would qualify as R&D.

But the IRS says they do – and who are we to argue?

Yet experts estimate as much as 95% of companies eligible for these tax credits – which are even more valuable than tax deductions, as they represent a dollar-for-dollar tax return regardless of your tax bracket – are foregoing these credits.

These include companies that are using R&D tax credits, but are under-utilizing them by failing to claim payroll and other indirect costs in support of their direct R&D expenses.

Multiple Paths to
Payment Recoveries

Many businesses are eligible for recovery of tax credits and overpayments of both taxes and other operating costs. The more such recovery efforts for which you qualify, obviously, the more cash back your business will receive.

It’s not uncommon for businesses to recover payments and credits from three or more sources that can climb well into the six figures and more.

Which makes this a bit of a no-brainer to at least explore. don’t you think?

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