A research and development tax credit for printing companies? It’s available to your printing company from the IRS. It’s a way to achieve a direct reduction of your tax bill. And, it’s simpler to qualify for than you probably think. So write Stuart W. Margolis, CPA, MT, and Bart Krupnick, CPA, CVA, in an article in the most recent issue of Signature, the newsletter for members of Printing Industries Alliance. Margolis and Krupnick—principals of MargolisBecker LLC, a financial management advisory firm—say that the credit can be obtained “with a reasonable amount of effort, just by documenting your normal research and development efforts.” In the printing industry, “R&D” usually connotes the white-coated work that the big technology manufacturers do in bringing new products to market. But thanks to simplification by the IRS, say Margolis and Krupnick, the credit “now has general appeal to any size company that invests any amount of time in R&D activities” as long as those activities can pass a four-part test that the IRS uses to determine eligible R&D costs. A fairly large number of activities undertaken by efficiency-minded printing companies may be able to meet these criteria. According to Margolis and Krupnick, they can include not just efforts to develop new products but also work done to improve internal processes—for example, workflow automation. The development of applicable models, prototypes, tools, jigs, and dies may be eligible, along with efforts toward patents, certifications, and environmental testing. If a printing company were to test new formulations of inks, coatings, or glues, that activity could be eligible as well. R&D being the leap in the dark that it often is, these efforts don’t necessarily have to be successful—just chargeable directly to the business that carries them out (as opposed to being passed through to customers). Under the revised rules, the benefit is computed as 6% of eligible expenses in the first three years. After that, annual R&D expenditures must exceed the average of expenditures in the three prior years (but the credit then goes up to 12%). The R&D tax credit is neither automatic nor a giveaway, and it clearly isn’t something to be pursued without expert assistance. But, as Margolis and Krupnick observe, it’s a fair reward for the many developmental steps that printers have taken to serve their customers better. “Don't overlook this significant tax break and the opportunity it presents to technologically advance the printing industry,” they write. “And now the government will even give you money back in the form of this tax credit for doing it.”