A little-known tax exemption that plastics processors and toolmakers might qualify for is the research and development tax credit - a credit that could free up $100,000 for a small company and as much as $300,000 for midsize companies.
``It's an area of tax that is extremely subjective and complex. A lot of small to midsize [certified public accountant] firms aren't familiar with it or [don't] know how to effectively apply it,'' said Scott Schmidt, principal at Black Line Group, a Minneapolis-based firm that specializes in helping customers qualify for the tax credit.
The credit has caught the attention of Society of the Plastics Industry Inc. officials in Washington.
President Bush signed into law the Tax Relief and Health Care Act of 2006 in December, which extended the credit. Catherine Randazzo, SPI chief operating officer, said in a telephone interview that manufacturers need to contact their senators and representatives to make it known in Washington that these sorts of tax-savings opportunities are important to the manufacturing community.
``It takes a grass-roots effort to help convince lawmakers to make this happen,'' she said.
Consulting group Plante & Moran PLLC of Southfield, Mich., also assists companies with the tax credit.
``We have helped many of these companies claim R&D annual credits of $35,000-$450,000 for activities such as mold design and testing, design and development of process automation and lean manufacturing,'' said Steven Everson, Plante & Moran's ``tax solutions'' director.
Everson said most manufacturing companies can qualify for some level of R&D credit.
``We work with a lot of middle-market manufacturing companies that either did not know about the R&D credit or didn't believe they would qualify,'' said Amy Forester, a certified public accountant and engineer with Plante & Moran.
Deb Crumley, Black Line's director of R&D tax credit work, said companies that do a lot of custom work may qualify for the credit, which can mean substantial savings.
``We won't get involved unless we can generate at least $80,000-$100,000 in immediate cash,'' Schmidt said.
Tom Nagelkerk, finance director for Cedar Springs, Mich.-based injection molder CS Manufacturing Inc., said the credit ``is certainly something that every processor should look into.''
``We were able to go back three years, filing amended returns,'' Nagelkerk said.
``The savings was in excess of $100,000. And it can be significant going forward. We're looking at saving anywhere between $50,000 and $100,000 for each of our three companies, annually,'' he said.
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Black Line Group provides a 10-question "assessment tool" designed to help companies determine whether they qualify for the credit. The tool is available at www.blacklinegrp.com.