New Report Helps You Understand Experimentation In The Healthcare R&D Tax Credit

Jun 2, 2023

A recent webinar created confusion about the definition of ‘experimentation’ within the federal tax laws relating to research and development tax credits for physicians. Expert agency TaxRx Group clarifies the matter in a new report.

Does the research and development tax credit for physicians confuse you? An expert report discusses how and where it applies.

TaxRx Group, an agency specializing in federal tax benefits for healthcare professionals, has published a new report explaining how the term ‘experimentation’ is defined within the research and development tax credit guidelines.

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The new report was written in response to a recent webinar during which a commentator interpreted the term ‘experimentation’ as being ‘the discovery of something new’.

The word arises in The Audits Technique Guide, which is used by IRS auditors during R & D tax credit evaluations. The guide states that qualifying research “constitutes elements of a process of experimentation for a qualified purpose (also known as the process of experimentation test).”

In establishing what ‘experimentation’ actually means, the new report provides you with several other excerpts from The Audit Techniques Guide, which help to clarify the term.

Firstly, the guide states that: “there is no ‘discovery’ requirement under section 41 separate and apart from… research undertaken to eliminate uncertainty concerning the development or improvement of a business component.”

The new report highlights the word ‘uncertainty’ as being the key factor you should consider in defining ‘experimentation’, and proceeds to examine what that means in the context of healthcare.

Statute is referred to by the report to understand what ‘uncertainty’ means, and it concludes that the term applies to both the method being used and the capability of the physician.

With regard to method, the report suggests that any issue you encounter which has multiple approaches to treatment can be considered ‘uncertain’.

The report also states that uncertainty in relation to capability could be demonstrated when you have a requirement for training or an adjustment to business processes.

TaxRx Group provides professional tax consultancy services to physicians throughout the US. The company works closely with doctors and important staff members to prepare tax submissions that comply with all areas of federal tax law.

A company representative stated: “Uniquely, TaxRx Group utilizes a recognized clinical trial process as we assist our clients as they frame their qualifying activities in the appropriate format.”

Discover how TaxRx Group can help you! Click on to learn more!

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