Telecommunications - Specialty Tax Advisors

The Telecommunications sector involves high capital and infrastructure investment, technological advancement and innovation, energy efficiency and environmental goals, and digital transformation and connectivity, all areas that are candidates for tax incentives.

Ideal Candidates:

Wireless and broadband infrastructure providers
Telecom equipment manufacturers
Satellite and cable service companies
Call center and operations hub owners
Fiber network developers and operators

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

Cost Segregation

Telecom facilities (e.g., data centers, call centers, switching stations, retail stores) often contain specialized components:

Fiber cabling, backup generators, HVAC for equipment rooms, control systems
Cell towers, underground conduits, antenna systems

Benefit: Reclassifies long-lived assets into 5-, 7-, or 15-year property, enabling accelerated depreciation and large year-one deductions.

Research & Development (R&D) Tax Credit

Qualifying activities in telecom include:

Development of next-gen communication platforms (5G, VoIP)
Network optimization and security protocols
Software for billing, customer experience, or load balancing
Integration of IoT and edge computing

Benefit: Up to 10% credit on qualified development wages, supplies, and subcontractor costs—available even if no product is sold.

179D Tax Deduction

Telecom infrastructure operators may qualify when building or retrofitting:

Data centers, call centers, and operations facilities
Deduction up to $5.00 per square foot for efficient lighting, HVAC, or envelope systems

Benefit: Immediate write-off of sustainability-driven improvements.

What Services are Included?

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

Telecom providers capitalize extensive infrastructure and equipment:

Asset reviews often uncover costs eligible for expensing or partial disposition (e.g., legacy systems removed during upgrades)

Benefit: Enables catch-up deductions and increased current-year write-offs via §481(a) adjustment.

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

Export Tax Incentive for companies that manufacture and export telecom equipment or software-embedded systems:

Profits routed through an IC-DISC entity are taxed at lower dividend rates

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.