Manufacturing Case Study

Overview

The custom-machine manufacturer's accounting system was not able to track R&D expenses. Further, the specialty manufacturer did not have the time nor the expertise to determine which projects met the IRS regulations and which did not. It was not sensible for the company's engineers to spend time evaluating R&D credits when they could be working on customer projects. The client wanted a safe solution.

The Client

The company has a uniquely innovative way to understand a customer's problem and build a custom, working solution from scratch.

  • Custom (Engineer-to-order) automation manufacturer

  • $100 million in revenue, $2.7 million in tax liability

  • 3 divisions across 4 Midwest states

  • Over 4 decades of operation

  • Multiple industry excellence awards

  • Preferred vendor in automotive, aerospace, and consumer products industries

Challenges

The client had only enough tax liability to utilize $1.9 million in credits. Sycamore was asked to establish the optimal project cut-offs to reduce the work for all parties. Tax-credit-eligible R&D projects and costs were marbled throughout the organization, making them complex and time-consuming for the organization to evaluate. Sycamore evaluated hundreds of projects for the client. The company maintained a conservative stance toward taxes and wanted protections in case the credits did not materialize—they wanted industrial strength safety to ensure credits would stand under audit.

Deliverables

  • 25,000-page Digital Audit Library with R&D write-ups for every project claimed.

  • 4,200 Sycamore working hours devoted to the project—it takes significant time to write audit-ready project reports.

  • $1.94 Million tax credits validated under IRS exam. Before consulting Sycamore, the company only successfully claimed $375K in credits.

Customer Quote

“We wanted industrial strength safety, so we chose Sycamore because they had a large team of technical writers who could prepare reports on each of our projects we claimed. We appreciated their deep expertise in understanding engineering documentation and that they were able to qualify, with certainty, which of our customer jobs were indeed R&D as defined by the IRS. We were able to recover a significant amount of credits that would otherwise have been lost. We were not surprised when the credits survived an IRS audit. We knew we were underutilizing the credit; we had no idea by how much.”