Headed to ISC East? Five Myths Security and AV Integrators Believe About the R&D Credit

TL;DR

• Installing other companies’ products does not rule out the credit. Custom integration work where the method was genuinely uncertain may qualify, depending on the facts.
• A customer paying for the job does not automatically make it funded research, and the gear you install is generally not a research supply.
• Programmers, designers, and the leads who supervise or directly support that work can count. A study does not need to pull them off live jobs.

Why this matters the week of ISC East

ISC East runs November 3 to 5 at the Javits Center in New York, and the show floor covers access control, video, cybersecurity, AI, and IoT. If you are an integrator who spends the month before a show finishing jobs and preparing for meetings, a tax credit is probably not at the top of your list. It may deserve a spot. The federal research credit (Internal Revenue Code Section 41) rewards businesses that spend money developing or improving a product, process, or piece of software through real technical problem solving. Here are five beliefs that keep integrators from checking.

Myth 1: “We install other people’s products, so there is nothing for us to develop.”

Much of an integrator’s work is installation and configuration, and the statute does exclude research related to adapting an existing business component to a particular customer’s need. But integration is not always routine. Building a custom control layer, a driver for equipment that has no supported interface, or a system design for an unusual multi-vendor site, where you did not know up front whether a given approach would work, may involve the kind of technical uncertainty the regulations describe in Treas. Reg. 1.41-4. Whether a particular project qualifies depends on the specific activities, documentation, and facts.

Myth 2: “If the customer pays for it, it is funded research and out.”

The statute excludes research to the extent it is funded by another person, but the regulations on funded research (Treas. Reg. 1.41-4A) look at the contract. In broad terms, they ask whether payment depended on the work succeeding and who kept substantial rights to the result. Two jobs that look identical on an invoice can come out differently on paper. Reviewing your standard agreements is a reasonable first step.

Myth 3: “The cameras, readers, and panels we install count as supplies.”

Generally they do not. Supplies for the credit are tangible property used in the conduct of qualified research and exclude property subject to depreciation. Equipment you buy and hand to the customer is usually part of the job’s cost, not a research supply. For most integrators, wages for qualifying work are the center of a claim.

Myth 4: “Only engineers count, not our programmers and commissioning leads.”

The regulations (Treas. Reg. 1.41-2) look at what the person did: actually doing qualified work, directly supervising it at the first-line level, or directly supporting it. Titles are not the test. Programmers, system designers, and lead technicians who work through technical problems may fit, while sales and general administration usually do not. Many people split their time, so only the qualifying portion is generally considered.

Myth 5: “A study will pull our team off live jobs.”

Strata starts with a $0 initial assessment. If a claim looks worthwhile, the typical turnaround is 4 to 8 weeks, depending on the business. The time asked of your team is modest, and most of the work sits with Strata. The result is a documentation package built to support the claim, which you give to your own CPA, who files the return. For context, a Utah audio/visual firm identified $300K+ in credits. Individual results vary, and each claim depends on the specific activities, documentation, and facts.

Where to go from here

Strata offers three ways to engage (Self-Serve, Full-Service, and Enterprise), so you can choose how much of the work you keep. If these myths sounded familiar, book a 15-minute review and a $0 initial assessment at stratataxgroup.com/contact. The IRS also publishes Instructions for Form 6765 for background.

This post is for informational purposes only and does not constitute tax or legal advice. Consult a qualified tax professional regarding your specific circumstances.