Technology - Specialty Tax Advisors

The Technology sector involves high R&D cost, innovation, technology adoption, digital transformation, environmental sustainability, investment in infrastructure and tech ecosystems, venture capital and investment, and exporting technology, all areas that are candidates for tax incentives.

Ideal Candidates:

SaaS and platform developers
Cybersecurity, AI, blockchain, and fintech companies
Tech firms owning data centers or campuses
Hardware and component exporters
Pre-revenue startups seeking payroll tax offsets

Here’s an overview of how Technology companies can benefit.

Research & Development (R&D) Tax Credits

Most tech firms are rich with qualified activities, including:

Software and app development (SaaS, mobile, cloud)
AI, machine learning, and data analytics platforms
Cybersecurity solutions and blockchain systems
Product prototyping, hardware integration, and testing

Benefit: Up to 10% of eligible expenses as a federal tax credit, plus dollar-for-dollar offset against payroll taxes for startups with little or no income.

Section 174 Compliance & Optimization

As of 2022, R&D expenses must be capitalized and amortized over 5 years (15 for foreign).

A detailed R&D study can ensure accurate cost capture
Mitigates audit risk and ensures proper tax treatment

Benefit: Maintains compliance while preserving long-term deductions.

Cost Segregation

If a tech company owns or renovates real estate including tech campuses, data centers, or offices:

Reclassify assets like server racks, data cabling, HVAC, and specialty electrical into shorter depreciation categories

Benefit: Accelerated depreciation = larger deductions in early years = better cash flow and reinvestment ability.

What Services are Included?

179D Tax Deduction

Applies to:

Corporate HQs, data centers, or labs with energy-efficient lighting, HVAC, or envelope upgrades
Design/build firms working on public or nonprofit energy-efficient projects

Benefit: Deduction of up to $5.00/sq ft, often combinable with cost segregation strategies.

Section 263A (Uniform Capitalization Rules) & Fixed Asset Reviews

Particularly relevant to:

SaaS providers and hardware developers with large, capitalized costs
Companies with leasehold improvements, buildouts, or internally developed software

Benefit: Recovers missed deductions and corrects overcapitalization errors.

IC-DISC (Interest Charge – Domestic International Sales Corporation)

Export Tax Incentive for tech manufacturers/exporters of physical products (hardware, devices, chips, embedded systems):

Routes export profits through a tax-favored structure

Benefit: 10–20% permanent tax savings on qualifying export income.

Form 3115

A Form 3115 - Application for Change in Accounting Method, allows businesses to request approval from the IRS to change their accounting method. This form might be required when making changes to claim various tax credits.

Changing Depreciation Method
Inventory Method
Accounting for Repairs vs. Capital Improvements

Benefit: Tax relief through audit protection, improved financial reporting accuracy, potential tax benefits, and compliance with IRS Regulations.

Payroll Tax Reduction Strategy

Companies with W2 employees will qualify for this tax credit program.

Proven ROI with significant Payroll Tax savings recognized on first payroll cycle
Eligible employees see an increase in net take-home pay
Zero upfront or out-of-pocket cost to employer or employee
Attract and retain top talent
Audit compliance

Benefits: Employer FICA Tax Savings is $56.80 per month or $681.60 per year per eligible employee. Employee FICA/State/Federal Tax Savings includes an approximate 3-4% increase in monthly net take-home pay.