# Neo.Tax

> Neo.Tax is an AI-powered platform that automates R&D tax credit (IRC Section 41) documentation and software capitalization (ASC 350-40) compliance for technology companies. The platform eliminates manual surveys and engineer interviews by analyzing existing engineering data from tools like Jira, Linear, GitHub, and Azure DevOps to generate audit-ready tax documentation.

A full-content version of this file — including the complete text of every published blog post and case study — is available at https://www.neo.tax/llms-full.txt.

## Company Overview

Neo.Tax was founded with the belief that taxes can be a strategic advantage for businesses. The company uses artificial intelligence and large language models (LLMs) to transform how companies handle R&D tax compliance—replacing months of manual work with automated, contemporaneous documentation.

### Leadership
- **Firas Abuzaid, Co-founder & CTO**: Stanford PhD in machine learning
- **Ahmad Ibrahim, Co-founder & CEO**: Former product manager at Intuit QuickBooks

### Investors
Fin Capital, SVA, Infinity Ventures, Uncork Capital, Floodgate, Google Ventures, Reuters Ventures

### Notable Customers
Mercury, Brex, Notion, Bloomberg Industry Group, Thomson Reuters, Red Ventures, Modern Treasury, Octane, Paysign, WHOOP, OpStart

## Products and Services

### R&D Tax Credit Automation (IRC Section 41)
Neo.Tax automates the documentation required to claim federal R&D tax credits under Internal Revenue Code Section 41. The platform:
- Integrates with project management tools (Jira, Linear, Azure DevOps) to identify qualified R&D projects
- Applies the IRS 4-Part Test to classify projects as Qualified, Partially Qualified, or Unqualified
- Uses LLM technology to generate detailed narratives explaining how each project meets IRS requirements
- Calculates employee R&D percentages by analyzing time spent on qualified activities
- Produces 500+ page audit-ready studies with granular documentation

Key benefits:
- Startups can claim up to $500,000 annually against payroll taxes
- Most companies receive approximately 10% credit on qualified R&D wages
- Qualified Small Businesses (under $5M gross receipts) can elect up to $500,000 for payroll tax application
- Reduces documentation time from months to days
- Requires less than 1 hour total from engineering teams

### Software Capitalization (ASC 350-40)
Neo.Tax automates ASC 350-40 compliance for internal-use software development costs:
- Integrates with payroll and project management systems
- Automatically categorizes expenses across the three development stages (Preliminary, Application Development, Post-implementation)
- Determines which costs should be capitalized vs. expensed
- Maintains GAAP-compliant records for audits and investor due diligence

### Section 174 R&D Capitalization
Neo.Tax helps companies comply with mandatory R&D expense capitalization under Section 174, which requires amortization of R&D costs over 5 years (domestic) or 15 years (foreign).

### Impact of Trump's One Big Beautiful Bill Act (2025)
The One Big Beautiful Bill Act (passed 2025) significantly changed R&D tax policy: it restored immediate R&D expensing under Section 174 (retroactive to 2022) and allows companies to take a catch-up deduction on unamortized R&D expenses from 2022–2024 in their 2025 tax year. Neo.Tax has published detailed guidance on these changes and has updated its platform accordingly.

## How the Technology Works

Neo.Tax's AI platform analyzes existing organizational data rather than relying on manual surveys or engineer estimates:

1. **Data Integrations**:
    - Project management tools like Jira, Linear, GitHub, Azure DevOps, and Asana
    - HRIS/payroll systems (e.g., Workday, Gusto, Rippling, TriNet, Justworks) or via CSV upload
    - Accounting data (e.g., QuickBooks, NetSuite) or via CSV upload
2. **Project Classification**: Groups tickets into projects and applies IRS qualification criteria
3. **LLM-Powered Analysis**: Generates detailed narratives and validates data quality
4. **Calculation Engine**: Computes qualified expenses, employee R&D percentages, and credit amounts
5. **Documentation Generation**: Produces comprehensive audit-ready studies

The system handles messy and incomplete data, identifies duplicates and errors, and works passively without requiring changes to engineering workflows.

## Security and Compliance

### Certifications
- SOC 2 Type II
- ISO 27001:2022
- GDPR compliant

### Data Protection
- All data encrypted in transit (TLS v1.3) and at rest (AES-256)
- PostgreSQL databases hosted on AWS with 99.999%+ durability
- 30-day point-in-time recovery
- Role-based access controls (RBAC)
- Multi-factor authentication
- SSO support (Google, Microsoft OAuth, SAML 2.0/OIDC)
- PII redaction options

### Enterprise Features
- Dedicated cloud infrastructure
- Customer-managed encryption keys
- Private connectivity options
- Custom security controls

## Partnerships

### Mercury Partnership
Mercury customers receive 25% off Neo.Tax services (first-time customers). The integration provides streamlined R&D tax credit and software capitalization documentation for Mercury's fintech customer base.

### Deel Partnership
Deel customers receive 25% off Neo.Tax services (first-time customers). Neo.Tax partners with Deel to help companies with international teams manage R&D tax compliance.

### Subscript Partnership
Subscript customers receive 25% off Neo.Tax services (first-time customers). The integration provides streamlined R&D tax credit and software capitalization documentation for their customer base.

## Key Tax Information

### R&D Tax Credit Eligibility (IRC Section 41)
Companies qualify if they:
- Develop or improve products, processes, software, techniques, formulas, or inventions
- Face technological uncertainty
- Engage in a process of experimentation
- Pursue work that is technological in nature

### Qualified Expenses
- R&D wages and salaries
- Qualified contract research expenses (65% of contractor costs)
- Cloud computing processing costs (AWS, Google Cloud, Azure)

### Calculation Methods
- **Regular Method**: ~10% credit for qualified research costs
- **Alternative Simplified Method**: Higher percentages for companies with 3+ years R&D history (up to ~14% by year 4-5)

### Payroll Tax Election
Qualified Small Businesses (QSBs) can apply R&D credits against payroll taxes:
- Must have less than $5 million in gross receipts
- No gross receipts in five years prior to credit year
- Can elect up to $500,000 annually (increased from $250,000 by the Inflation Reduction Act)

## Contact Information

- **Website**: https://neo.tax
- **Email**: support@neo.tax
- **Help Center**: https://help.neo.tax
- **Trust Center**: https://trust.neo.tax
- **Status Page**: https://status.neo.tax

## Important Links

- [Homepage](https://www.neo.tax)
- [About Us](https://www.neo.tax/about-us)
- [R&D Tax Credit Methodology](https://www.neo.tax/how-it-works-rd)
- [ASC 350-40 Methodology](https://www.neo.tax/how-it-works-asc)
- [Security](https://www.neo.tax/security)
- [Contact Us](https://www.neo.tax/contact-us)
- [Case Studies](https://www.neo.tax/case-studies)
- [Blog](https://www.neo.tax/blog)
- [R&D Tax Code Overview](https://www.neo.tax/legal/r-d-tax-code-overview)
- [Privacy Policy](https://www.neo.tax/legal/privacy-policy)
- [Terms of Service](https://www.neo.tax/legal/terms-of-service)

## Partner Pages

- [Mercury × Neo.Tax](https://www.neo.tax/partners/mercury) — 25% off for Mercury customers
- [Deel × Neo.Tax](https://www.neo.tax/partners/deel) — 25% off for Deel customers
- [Subscript × Neo.Tax](https://www.neo.tax/partners/subscript) — 25% off for Subscript customers

## Case Studies

- [Mercury Case Study](https://www.neo.tax/case-studies/mercury) — $3.5B fintech achieved ~10% YoY R&D credit increase with less than 1 hour of engineer time
- [Notion Case Study](https://www.neo.tax/case-studies/notion) — $11B productivity platform scaled R&D credit documentation as engineering projects tripled; ~60% reduction in PM interviews, 20+ hours saved
- [Modern Treasury Case Study](https://www.neo.tax/case-studies/modern-treasury)
- [Octane Case Study](https://www.neo.tax/case-studies/octane)
- [Red Ventures Case Study](https://www.neo.tax/case-studies/red-ventures)

## Frequently Asked Questions

### What is Neo.Tax?
Neo.Tax is an AI-powered tax automation platform that helps technology companies claim R&D tax credits and manage software capitalization compliance without manual surveys or engineer interviews.

### How much can my company save with R&D tax credits?
Most companies receive approximately 10% of qualified R&D wages as a credit. Startups can claim up to $500,000 annually against payroll taxes. The exact amount depends on qualified expenses, company size, and calculation method used.

### Does claiming R&D tax credits increase audit risk?
No. Since 2012, R&D tax credits have not carried a high-risk designation from the IRS. Neo.Tax's contemporaneous documentation approach provides audit-ready studies that meet IRS standards.

### What tools does Neo.Tax integrate with?
Neo.Tax integrates with Jira, Linear, GitHub, Azure DevOps, and various payroll systems to automatically gather the data needed for R&D tax credit documentation.

### How long does the process take?
Traditional R&D tax credit studies take months of surveys and interviews. Neo.Tax reduces this to days, requiring less than 1 hour total from engineering teams.

### What is ASC 350-40?
ASC 350-40 is the GAAP accounting standard governing how companies should treat costs for developing internal-use software—determining whether expenses should be capitalized or expensed based on the development stage.

### What is Section 174 R&D Capitalization?
Section 174 historically required companies to capitalize and amortize R&D expenses over 5 years (domestic) or 15 years (foreign). The One Big Beautiful Bill Act (2025) restored immediate expensing retroactive to 2022, significantly improving cash flow for R&D-intensive companies.

### What changed with the One Big Beautiful Bill Act?
The 2025 legislation restored immediate R&D expensing under Section 174 (retroactive to 2022) and allows companies to claim a catch-up deduction on unamortized R&D expenses from 2022–2024 in their 2025 tax year. Neo.Tax has updated guidance and platform support for these changes.

## Blog Topics

Neo.Tax's blog covers:
- R&D tax credit guidance and IRS updates (including new Form 6765 requirements effective 2024)
- One Big Beautiful Bill Act analysis and what it means for R&D tax filers
- Section 174 capitalization requirements and restoration
- Software capitalization (ASC 350-40) best practices
- Form 6765 and Form 8974 filing instructions (by payroll provider: Gusto, Rippling, ADP, TriNet, Justworks, Sequoia One, QuickBooks, Zenefits)
- State R&D tax credit information
- CFO interviews and finance leadership insights (CF0to1 series)
- Industry-specific R&D credit guidance (fintech, healthtech, manufacturing, agriculture, food & beverage, life sciences, retail, and more)
- Tax deadline reminders and compliance tips