Issue link: http://palletcentral.uberflip.com/i/1370374
PalletCentral • May-June 2021 27 manufacturing skills, is likely to qualify for R&D tax credits. Companies do not need patents or even an R&D department to qualify. In fact, the IRS continues to expand the definition of qualifying R&D. If your company designs and manufactures pallets and wood packaging, you are likely to be constantly improving your products and processes to remain competitive. You may be experimenting and developing alternative packaging designs, creating efficiencies in production and distribution, or developing and implementing advanced technology. Pallet manufacturing companies and sawmills that use technology, such as the Pallet Design System™ (PDS), log grading or sorting software, or other pallet design technology, may qualify for the R&D tax credit. Some examples of wood packaging industry activities that may qualify for the R&D tax credit include: n Designing or developing new or improved processes n Testing product design requirements and specifications n Designing and developing processes to reduce costs or improve performance n Developing processes or technology to reduce costs and product damage n Developing technology, software or mobile applications for research and development n Developing product specification software n Developing prototypes or samples n Researching characteristics including stack-ability, durability, weight, environmental effects n Streamlining processes through automation n Integrating new materials to improve product manufacturing processes Recent Changes Congress expanded the ability to monetize the research tax credit in 2015. Eligible small businesses, defined as those with average sales of less than $50 million over the prior three tax years, will be able to use the credits to offset the Alternative Minimum Tax (AMT) for tax years (beginning after December 31, 2015). Additionally, certain startup companies can use the research credit to offset the employer's payroll tax (i.e. FICA) liabilities. To do so you must meet certain criteria, including having sales of less than $5 million in the current year and having had less than five years of revenue. Pallet manufacturing companies and sawmills that use technology, such as the Pallet Design System™ (PDS), log grading or sorting software, or other pallet design technology, may qualify for the R&D tax credit. TAX CREDIT$ iStockphoto.com/Marat Musabirov