manufacturer workers can offer valuable tax credits to manufacturers

The Danger In Assuming

Many manufacturers trust that their tax professionals are proactively identifying and securing all available tax credits and incentives. However, this assumption can be costly—leading to missed opportunities for significant financial savings.

The Costly Oversight: R&D Tax Credits
ABC Manufacturing, a mid-sized metal fabrication company, believed their long-time tax accountant was handling all potential tax-saving opportunities. For years, they were engaged in activities that qualified for the Research & Development (R&D) Tax Credit, such as designing custom machinery, improving production processes, and testing new materials.

However, their tax professional never inquired about these activities, and the company never claimed the credit. After hiring a specialized tax consultant, they discovered that they had missed out on over $1.2 million in tax credits over five years—money that could have been reinvested into their business for growth and innovation.

The Root of the Problem

  1. Lack of Proactive Review – The company’s general tax accountant primarily focused on compliance rather than strategic tax planning.

  2. Limited Understanding of Specialized Tax Credits – Many traditional tax professionals may not have deep expertise in industry-specific credits like the R&D tax credit.

  3. The Manufacturer’s Assumption – The business owner assumed that their accountant was automatically identifying and applying for all available credits, which was not the case.

The Financial Impact

  • Lost Tax Savings: $1.2 million in unclaimed credits over five years.

  • Delayed Growth Opportunities: The company could have used those funds to purchase new equipment or expand operations.

  • Increased Tax Burden: They paid more in taxes than they legally owed, reducing their competitive edge.

Final Suggestion
Never assume that your tax professional is actively pursuing all possible tax credits. Manufacturers should seek specialized tax advisors who understand R&D tax credits and proactively identify opportunities.