Seven Questions to Ask Before You Hire an R&D Credit Provider

TL;DR

• The R&D credit is a legitimate, valuable incentive, and the quality of the study behind it varies widely from one provider to the next.
• The difference between a defensible claim and a risky one usually comes down to how the provider works: who does the analysis, what gets documented, and what you receive when the study is done.
• Seven questions, asked before you sign, will tell you most of what you need to know.

The federal R&D tax credit under IRC Section 41 rewards real work: developing or improving products and processes through technical experimentation, as defined in Treasury Regulation 1.41-4. But two studies claiming the same credit can be built very differently, and the difference shows up later, when the claim needs to hold up. That is why choosing who prepares your claim matters as much as deciding to claim.

If your company is in the $3M to $15M range, you likely do not have a tax department to referee this. These seven questions can.

1. Who will actually look at our work?

A credible study involves people who understand both the tax rules and your technical work talking to the people who did it. Be wary of any process that assigns qualified percentages to employees based on job titles from a spreadsheet, without anyone asking what those people actually built, tested, or struggled with. If nobody plans to talk to your engineers, integrators, or developers, the numbers are guesses.

2. What will you tell us does not qualify?

This may be the single most revealing question. Every real business has activities that fall outside the credit: routine maintenance, cosmetic changes, work after uncertainty is resolved. A provider who cannot name a single category of your work that would be excluded is not analyzing your facts; they are qualifying everything and hoping. The answer you want is a thoughtful line between what likely qualifies and what does not, specific to your operation.

3. What do we receive besides a number?

The deliverable should be a documentation package built to support the claim: what the qualified projects were, what uncertainty was addressed, how expenses connect to activities. IRS reporting requirements have expanded, and Form 6765 now asks filers for considerably more detail about their research. If a provider's deliverable is a credit amount and a form, the substantiation burden quietly transfers to you.

4. How will your work hold up if the IRS asks questions?

The best answer here starts with the deliverable itself: a study documented well enough that the answers to an examiner's questions are already on paper. Beyond that, ask what role the provider plays if questions come, and expect a clear, specific answer about the scope of that support. Providers who do rigorous work are glad to explain exactly what they stand behind. Vagueness on this question, in either direction, is worth noticing.

5. How much of our team's time will this take?

A well-run study should not eat your team's month. Most of the work can sit with the provider, with your people contributing focused input where their knowledge is needed. If the pitch is "you will barely hear from us," pair that with Question 1: no time from your team can mean no real diligence. The right answer is modest, structured involvement, not zero and not endless.

6. How will you work with our CPA?

Your CPA files the return the credit lives on, so coordination is not optional. A good specialist works alongside your CPA, shares the supporting detail they need, and treats them as part of the team. If a provider talks about your CPA as an obstacle, or plans to work around rather than with them, expect friction at exactly the wrong moment: filing time.

7. What would make you tell us not to claim?

Sometimes the honest answer to "should we pursue this?" is "not this year," because the qualified activity is thin or the documentation is not there yet. A provider willing to say that is showing you how they will behave on every closer call inside your study. One who has never met a company that should not claim has told you something too.

The pattern behind the questions

Every question above is really the same question: does this provider's process produce a claim that holds up? A claim you can defend optimizes for keeping the credit. Those can look similar on day one and very different in year three. Strata's initial assessment is $0, and we welcome all seven of these questions. Any provider doing the work properly should.

If you are weighing a claim or a provider, contact Strata for a $0 initial assessment.

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