R&D Tax Incentives for the Gas and Oil Industry

Many companies in the state of Texas are missing out on important tax credits because they feel that they are not entitled to them. This applies as much to the oil and gas industry as to any other that currently receives the credits from the federal government.

What is the R&D Tax Incentive?

The Research and Development tax incentive is designed by the federal government to encourage companies and industry to perform valuable research which creates innovation and creativity. The idea is that it encourages investment into industry and technology which has the knock on effect of providing benefits to society as a whole with new processes and products being created. Many oil and gas companies are not aware of the opportunity that this tax credit affords them and lose out on valuable credits that can sustain those all important cash flows.

How Does the R&D Tax Incentive Apply to the Oil and Gas Industry?

The oil and gas industry is a prime example of an area where innovation and research takes place. The tests that a company must be assessed on in order to receive the tax credits can be interpreted in a way beneficial to this industry as much of the work completed is of  R&D nature. Initiatives which could be interpreted as being acceptable include:

  • The design and development of new advanced drilling techniques
  • The design, development and engineering of new offshore platforms and vehicles
  • The design and development of new refined products and the testing of improvements to the refining process
  • The design and development of new processes for bioremediation, clean-up of oil spillages and emissions control

The list goes on. The oil and gas industry in Texas and many other states is a prime candidate for receiving these valuable credits.

Claiming the Tax Credits:

The paperwork involved in making a claim for the R&D tax credit can be onerous. Keeping the credit can be even harder. Having the support of a professional company such as Texas R&D Tax Credit Solutions who have expertise in the area and can focus on obtaining the correct documentary evidence for the IRS should be an important part of any company’s financial strategy. Because the tax credits are so valuable to the companies who receive them, the effort involved in obtaining and keeping the credits is always worth it. To do this quickly and efficiently, an understanding of the legislation and rules is required.

If you think that your company might be missing out on these valuable tax credits, speak to a professional advisor who can provide guidance and support throughout your claim.