Given the importance of extending runway in today’s high-interest-rate reality, it’s shocking to learn that just 3 out of every ten companies that qualify for the R&D Tax Credit claim the money they’re owed. In 2011, “the largest 0.13 percent of all firms in the US claimed 14 percent of the credits,” according to research by the Mercatus Center at George Mason University. So, if you’re on the fence about claiming the credit, remember that the big guys are claiming it; shouldn’t you, too?

But this isn’t an article designed to make you feel foolish. FOMO Marketing is not our thing. We at Neo.Tax have built our AI-powered R&D Credit filing tool to make sure every innovative American business can claim the money they’re owed. So, get in touch with our team of experts to walk you through the process! And if you didn’t file for your credit last year (or the year before that, or the year before that…), don’t worry. We can help with that, too!

Many people don’t know this, but you can claim the R&D tax credit for the current tax year plus amend returns for the previous three tax years. For example, in 2023, you could claim credits for 2023, 2022, 2021, and 2020. That retroactive tax filing could be worth hundreds of thousands of dollars (or more) for your company. Neo.Tax doesn’t just stop at your prior three years, though. Due to the mechanics of the credit calculation, it may be beneficial to go back even further to substantiate qualified research activities to maximize the credit in your amended tax years. We can help with that – the lapsing of time is not a limiting factor to our technology! We know that’s getting very inside baseball; again, book a call, and we can talk you through it…

But even those who do know about the value of a Multi-Year Lookback R&D Credit often decide against filing because of the expenditure of time and effort to correctly calibrate the amount you’re owed. The big change with Neo.Tax is that by linking with your existing project-management system, our AI-powered tool can seamlessly identify qualified expenses from past years. What used to be difficult (or impossible, if enough engineers had moved on and are unreachable for interviews) is now quick, low-lift, and much more accurate than human memory could muster.

With Neo.Tax, it’s simple: if your company has a project management system that goes back x number of years, just plug it into Neo.Tax, and our groundbreaking tool can generate the projects and assign the effort for employees across each of those years. In solving for the pain of filing an R&D credit, we also built a tool to make Multi-Year Lookbacks painless and worth it for every innovative company. 

The big guys have been claiming it for years. Now’s the time to claim it too.

For enterprise companies, tax season is equal parts stakes and tedium. To file an IRC Section 41 R&D Tax Credit at an innovative company, the time expenditure can become especially daunting. 

One of the big challenges faced by a controller or a head of tax during tax season is creating and then interpreting an accurate snapshot of all the work completed at a company during a given year. Traditionally, that process takes hundreds of hours: interviews with engineers, surveys, combing through project management system data, and more. That time expenditure was justified because the R&D tax credit is hugely valuable for innovative companies — but certainly, engineers and executives could be creating much more value if those hours were freed up. 

“Recently, a controller at an enterprise company shared with me that they spent 150 hours on R&D Taxes alone,” Neo.Tax Head of Sales Ben Eachus says. And that’s before considering the worst-case scenario: an audit means hundreds more hours of labor and possibly burdensome penalties for a company. Think of the value of redistributing those hours toward forward-looking strategy or other tasks needed for the company to succeed.

Neo.Tax’s AI solution connects directly with a company’s existing internal task-level data sources to create an accurate, exhaustive, and audit-proof IRC Section 41 filing. 

To learn more about how our groundbreaking technology works, download our White Paper: Leveraging AI in Conducting an IRC Section 41 R&D Tax Credit Study

Like all game-changing ideas, Neo.Tax’s AI solve for R&D Tax Credits feels like a simple fix to a widespread problem. Every innovative enterprise company has to sort through mountains of data and conduct time-consuming interviews with engineers to file their IRC Section 41 R&D Tax Credit. Almost all of those same companies now use internal task-level data sources such as Jira and GitHub. Clearly, an AI tool should be able to outperform a human in ingesting and translating the datasets from multiple sources.

Of course, for a problem as meticulous and high stakes as taxes, the construction of the AI tool is of paramount importance. At Neo.Tax, our team of machine-learning experts, AI engineers, and tax experts dove into creating an LLM specifically fluent in R&D Tax-related inputs. 

"People have been waiting for a breakthrough application of AI for business,” Neo.Tax co-founder and CTO Firas Abuzaid says. “This LLM use-case for the R&D credit demonstrates how powerful AI can be when thoughtfully designed to solve a rote, time-consuming, and repetitive task.”

The LLM sorts through the varied datasets to determine which tasks are R&D-related and each employee’s effort-per-task to determine the percentage of their compensation that counts as a qualified R&D expense. On top of that, the LLM has been trained to determine duplicate tickets and other human-error inputting issues that muddy the data. Finally, the LLM aggregates all the qualified employee/contractor expenses for the company and calculates the total QREs, creating an accurate, exhaustive, and audit-proof IRC Section 41 filing (as well as a study that the IRS may request at a future date).

The IRC Section 41 LLM is a groundbreaking example of the ways that AI can revolutionize backend business processes. To learn more about how our technology works, download our White Paper: Leveraging AI in Conducting an IRC Section 41 R&D Tax Credit Study

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