Does the firm use the Comprehensive Project-by-Project Methodology?
Ask if the firm will utilize the comprehensive project-by-project methodology as well as establish a detailed “nexus” of Qualified Research Expenditures to Qualified Research Activities. One of the IRS’s biggest concerns is that some companies’ “engineering” reports are in fact written by individuals with no engineering or scientific background and that “no nexus” is established between a company’s qualifying expenditures and qualifying activities. Their documentation should directly connect the project to the employee and the estimated time spent on that project to each of the years under engagement. It is the most thorough methodology accepted by the IRS today. 3. Does the firm assume most of the risk? To begin a project, most firms will ask to bill by the hour (sometimes with a cap) or sell on a lump fixed fee. This approach carries too much client side risk because there are too many variables that simply cannot be foreseen at the beginning of the project. Choose a firm that is wil
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