Federal Research Credit Extended and Improved

On Dec. 18, President Obama signed the Protecting Americans from Tax Hikes Act of 2015, also known as the “tax extenders package.”

We are pleased to announce that the Research Credit has become a permanent fixture of the Internal Revenue Code!

In addition, the tax extenders package makes a number of changes to how taxpayers may utilize their research tax credits, allowing taxpayers to monetize the benefit faster. Here’s what you need to know about the bill:

  • Research Credit Made PermanentThe Research Credit provision of the bill is retro-active and permanently extends the credit. This provision of the bill is effective for amounts paid or incurred after Dec. 31, 2014.
  • Start-Up Companies to Offset Payroll Taxes with Research Tax CreditBeginning in tax years beginning after Dec. 31, 2015, certain start-up companies will be allowed to utilize the research credit to offset the employer’s payroll tax (i.e., FICA) liabilities.
  • AMT Turn-OffEligible small businesses, defined as those with average sales of less than $50 million over the prior three tax years, will be able to offset both regular income tax and Alternative Minimum Tax (AMT) in tax years beginning after Dec. 31, 2015.
  • Impact on Research Credit ClaimsThe provisions in this bill are extremely taxpayer-friendly. Coupled with new regulatory guidance issued earlier this year and late last year, taxpayer’s research credit claims, as well as the amount of credit that can be utilized, should grow.

We hope you find this information valuable. As always, we are here to help and welcome the opportunity to discuss these provisions. Please do not hesitate to contact us.

Evaluating Plant Expansion Needs

The plastics manufacturing industry is on a definite upswing across many markets, including automotive, medical and construction. As volumes have increased, processors are finding existing resources maxed out and many are looking to expand. However, expansion can be risky if the right assessments aren’t done prior to purchasing a new building or expanding an existing facility. Scott Walton, Harbour Results, Inc., recently delved into this topic for Plastics Business readers. Continue reading

Effective Inventory Management Adds to the Bottom Line

Some plastics processing companies I’ve toured have extensive inventory management and reordering systems, with set-in-place methods for evaluating needs and efficiently purchasing replacements. Some, however, do not. Whether we’re talking about $5 flashlights or $5,000 replacement parts for injection molding machines, inventory adds up to big dollars. Is your company costing itself money with an inefficient system?
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Industry Growth Apparent in New Equipment, New Hires

As an editor for three different magazines related to the plastics processing industry, I receive a lot of press releases from companies wishing to share news. On an average day, I would guess 40-60 emails hit my inbox, announcing everything from new websites to facility expansions. The most common, however, and the ones that give me a strong sense of where the industry is headed, are equipment installations and hiring announcements.

Over the last year, all-electric injection molding machines have dominated the installation announcements, but I’ve also seen several companies branching out into 3D printing. At this point, those companies are planning to use the equipment for prototyping purposes, but some are beginning to focus on small-scale production opportunities, too. Some processors are bringing additional tool building capabilities in-house, but that has been rare (or not reported via press releases). More common has been expansion into secondary services, such as ultrasonic or laser welding, digital inkjet decorating and laser marking.

Also common has been an uptick in hiring of sales staff. I have not seen a corresponding increase in the number of customer service/account management positions, so my guess is that processing companies actively are seeking to expand capacity, but haven’t yet seen a return that has pushed account management beyond its current capabilities.

Now, this isn’t a scientific assessment of the industry by any means, but I find it interesting nonetheless.

US House Passes Bill to Increase and Make Permanent the R&D Tax Credit

On May 20, The US House of Representatives passed H.R. 880, the American Research & Competitiveness Act of 2015, by a vote of 274-145.

H.R. 880 makes permanent the Alternative Simplified Credit (ASC) for calculating the Credit for Increasing Research Activities, and it increase the ASC credit amount to 20 percent of the research expenditures that exceed 50 percent of the average research expenditures for the prior three tax years.

In addition, the bill revives and makes permanent the 2010 tax provision that allows eligible small businesses to offset the Alternative Minimum Tax (AMT).

What Can Football Teach About Business Success?

The college football season has one game remaining, and the professionals are narrowing the field on approach to the Super Bowl. Teams don’t make it to the pinnacle games without a significant investment in personnel, equipment and training. And, when an investment is made, results are expected.

With expectations so high, what are the pathways to success? And, how do the lessons taught on a football field apply to those of us in the business world? Continue reading