Missouri R&D Tax Credit Explained for Companies

Missouri and the R&D Tax Credit

State Credit Name: Qualified Research Expense Tax Credit Program

Expiration Date: The application for tax credits must be submitted to the Department no later than the end of the taxpayer’s tax period immediately following the tax period for which the credits are being claimed.

Who Can Apply?:

An eligible taxpayer who has additional qualified research expenses in Missouri in a tax year, as compared to the average of such expenses in the three immediately preceding tax years.
Eligible Taxpayers include: Individuals, partnerships, or any charitable organization which is exempt from federal income tax and whose Missouri unrelated business taxable income, if any, would be subject to the state income tax imposed under chapter 143, or a corporation as described in section 143.441 or 143.471, or section 148.370, is an eligible applicant.
Applicants must have Missouri qualified research expenses incurred in at least one of the last three preceding tax years.

Credit Carry Forward: Can be carried forward 12 years

About the Credit:

The Program provides state tax credits for additional qualified research expenses, which is the difference between the Missouri qualified research expenses incurred in a tax year subtracted by the average of the taxpayer’s Missouri qualified research expenses incurred in the three immediately preceding tax years.
The tax credits are equal to the greater of: 15% of additional qualified research expenses, or 20% of additional qualified research expenses if the research is conducted in conjunction with a Missouri public or private college or university.
The tax credit can be applied to: Ch. 143-Income tax, excluding withholding tax, and Ch. 148-Taxation of Financial Institutions.

Thanks to this new state R&D tax credit prograrm, companies in advanced manufacturing, agriculture, biotechnology, healthcare, and transportation will remain competitive in the great state of Missourah!

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Important Considerations:

The aggregate of all tax credits eligible to be authorized shall not exceed $10,000,000 in any calendar year, with $5,000,000 reserved for minority business enterprises, women’s business enterprises, and small businesses.
If on November first of each year, there are unused amounts from the $5,000,000 reserved for minority business enterprises, women’s business enterprises, and small businesses, the unused amount will be transferred to the overall program cap.
The maximum tax credit available to a single taxpayer under this program for any tax year is $300,000.
If there are applications for the Program’s tax credits that exceed the amounts available, eligible applicants in the general cap will be issued credits on a pro-rata basis, with businesses less than five years old being issued full tax credits first.
No tax credit can be issued on that portion of the taxpayer’s qualified research expenses incurred within Missouri during a tax year to the extent such expenses exceed 200% of the taxpayer’s average qualified research expenses incurred during the immediately preceding three tax years.
An application must be filed with DED no later than September 30 of each year, DED will issue a tax credit certificate authorizing the applicant to claim the tax credits.
The Tax Credit Accountability Act reporting form must be submitted to the Missouri Department of Revenue by June 30 each year for three years following the year of the issuance of tax credits.
Qualified research expenses are defined as they are in federal law at 26 U.S.C. § 41, but must be incurred in Missouri.
Tax credits are available for expenditures including: Wages paid or incurred to an employee for engaging in, directly supervising, or directly supporting qualified research in Missouri; Supplies-tangible property other than land, improvements to land, and depreciable property, used in the conduct of qualified research in Missouri; With some exceptions, amounts paid or incurred to another person for the right to use computers in the conduct of qualified research.
For the above, 100% of in-house research expenses will count, and 65% of the costs for contract research expenses will count as qualified research expenses.

Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 12747 Olive Boulevard, St Louis, Missouri provides R&D tax credit consulting and advisory services to Kansas City, St. Louis, Springfield, Columbia, Independence, Lee’s Summit, O’Fallon, St. Joseph, St. Charles and Blue Springs.

If you have any questions or need further assistance, please call or email our local Missouri Partner on (314) 492-3920.
Feel free to book a quick teleconference with one of our Missouri R&D tax credit specialists at a time that is convenient for you. Click here for more information about R&D tax credit management and implementation.

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