Companies Who Develop Software for Internal Use Could Qualify For the R&D Credit

Written on February 4, 2015

On January 16, 2015, Proposed Treasury Regulations were released that will make it easier for companies developing internal use software to qualify for the R&D Tax Credit.  In the past, software that was not sold, leased or licensed to a third party was considered internal use software.  There was additional qualifying criteria for companies to have internal use software qualify for the R&D Tax Credit.

Under the new Regulations, software development that enables a company to interact with a third party (customer/vendor) is appropriate to exclude from the definition of internal use software and therefore it is not subject to the additional qualifying criteria.  Only development activities relating to financial management, human resource management, and back office support will now be considered activities that are considered internal use software.  By narrowing the definition of internal use software, the new Regulations make it much easier for companies to claim the R&D Tax Credit for software they have developed to provide services to customers.

To find out if your company could qualify for these beneficial tax credits, call 800.759.7857 or visit www.warrenaverett.com/R&D.

Back to Resources
Top