You’ve decided your business probably qualifies for the R&D tax credit. Maybe you took our quiz and scored as a strong candidate. Maybe your CPA mentioned it during tax planning. Maybe you’ve been reading about it for months and you’re finally ready to act.
Now comes the harder question: who do you hire to prepare the study?
This decision matters more than most businesses realize. The difference between a thorough specialist and a careless one isn’t just a few thousand dollars in credit value. It’s the difference between a credit that survives IRS examination and one that gets disallowed — taking your refund with it and potentially triggering penalties. After the ERC debacle, where aggressive promoters filed billions in questionable claims, the IRS has zero patience for sloppy credit studies.
Here are the seven questions you should ask any R&D tax credit firm before signing an engagement letter. The answers will tell you everything you need to know.
Key Takeaways
- The ERC enforcement wave has made the IRS more aggressive on all tax credits — the quality of your R&D study provider directly affects your audit risk
- Ask about technical staff — does the firm have engineers or scientists who can evaluate your activities, or just accountants working from questionnaires?
- Understand the pricing model — percentage-of-benefit, fixed fee, and hybrid models each create different incentives that affect how aggressively your credit is calculated
- Confirm they handle Section G, state credits, and Section 174A coordination — these are now essential parts of the engagement, not optional extras
Question 1: Do You Have Technical Staff Who Understand My Industry?
This is the most important question on the list. A defensible R&D credit study requires someone who can walk your shop floor, sit with your developers, or review your engineering drawings — and identify which activities meet the four-part test. That takes technical expertise, not just tax knowledge.
Green Flag ✓
Technical + tax hybrid team
The firm has engineers, scientists, or technical specialists who conduct interviews and evaluate activities — plus tax professionals who handle the credit calculation, Section 280C election, and return preparation. The two skill sets work together.
Red Flag ✕
Questionnaire-only approach
The firm sends you a survey, collects your answers, and generates a report without anyone visiting your facility or speaking to your technical staff. The IRS’s Audit Techniques Guide specifically warns examiners about claims built solely from questionnaires and estimates.
Question 2: What Does Your Audit Defense Look Like?
A credit that gets disallowed has negative value — you lose the refund, owe interest, and potentially face penalties. Your provider should stand behind their work if the IRS examines the credit.
Ask specifically:
| ? | Is audit support included in the engagement fee, or does it cost extra? The best firms include audit defense as standard. Firms that charge hourly for audit support have less incentive to build defensible studies in the first place. |
| ? | Will you respond to IRS IDRs and participate in examiner meetings? Some firms disappear when the IRS calls. You want a firm that responds to Information Document Requests, attends examiner conferences, and defends the technical positions in the study. |
| ? | What’s your track record in examinations? Ask how many studies have been examined by the IRS and what percentage of the credit was sustained. No firm wins 100% of the time — but a firm that can’t answer this question at all is a concern. |
Question 3: How Do You Price the Engagement?
Pricing models create incentives. Understanding the model tells you how the firm will approach your study.
A note on “no credit, no fee” promises: Some firms advertise that you only pay if they find a credit. This sounds risk-free, but think about what it incentivizes. A firm that only earns money when it finds a credit will always find a credit — whether or not one legitimately exists. The best firms are willing to tell you “this doesn’t make sense for your business” after the initial evaluation. A firm that won’t walk away from a bad fit isn’t looking out for you.
Question 4: How Do You Handle Section G Documentation?
Form 6765 Section G becomes mandatory for most filers in 2026. It requires business component-level QRE reporting — meaning the firm needs to identify each qualifying project by name, break out wages by category (direct research, supervision, support), and allocate supply and contract costs per component.
Any firm you hire in 2026 should already be preparing Section G-ready studies. If they aren’t familiar with the requirement or can’t explain how they’ll produce the data, that’s a serious red flag.
Green Flag ✓
The firm delivers Section G data as a standard part of the study — business component names, QRE breakdowns per component, Section E disclosures. You receive ready-to-file inputs for Form 6765.
Red Flag ✕
The firm gives you a single total QRE number without component-level detail. They “haven’t gotten to Section G yet” or say “it’s only required for large companies.” (It’s mandatory for most filers with QREs over $1.5M.)
Question 5: Do You Calculate State Credits Too?
37 states offer R&D tax credits that stack on top of the federal credit. If your research takes place in California, Texas, New York, or most other states, you should receive both credits from a single study. A firm that only calculates the federal credit is leaving your money on the table.
The incremental effort to calculate state credits is small once the federal study is complete. If a firm charges a significant premium for state credit calculations, ask why — the analysis uses the same qualifying activities with different rates and geographic allocation.
Question 6: How Do You Coordinate With My CPA?
Your R&D credit specialist should work seamlessly with your CPA or tax preparer. The credit flows into your tax return, interacts with the Section 174A deduction, requires a Section 280C election, and affects state filings. If the specialist and CPA don’t communicate, things fall through the cracks.
Ask this directly: “Will you provide my CPA with the Form 6765 inputs, Section G data, and a summary of how the credit affects the return?” The answer should be an unqualified yes. Firms that hand you a report and leave you to figure out how to integrate it into the return aren’t providing a complete service.
Question 7: Will You Tell Me If I Don’t Qualify?
This might be the most telling question of all. A reputable firm will evaluate your situation and give you a straight answer — even if that answer is “this credit doesn’t make sense for your business right now.” The initial evaluation should be free, and it should end with either a clear path forward or an honest explanation of why the credit isn’t a fit.
Be cautious of firms that guarantee a specific credit amount before reviewing your activities. The credit depends on detailed technical analysis. Anyone who quotes a number before doing the work is estimating at best and fabricating at worst.
From our practice: We turn down engagements. Not often, but regularly enough. If a company’s activities don’t clearly meet the four-part test, or if the projected credit doesn’t justify the study cost, we say so. That’s not a business model — it’s a professional obligation. The firms you should worry about are the ones that never say no. After the ERC enforcement wave, the IRS is applying that same scrutiny to R&D credits. A firm that finds a credit for every business that walks through the door isn’t maximizing — it’s inflating.
The Evaluation Checklist
Score any firm you’re considering
Before you sign:
| ✓ | Technical expertise. Does the firm have engineers or scientists who evaluate your activities — not just accountants collecting survey responses? |
| ✓ | Audit defense included. Will the firm defend the study at no additional cost if the IRS examines it? |
| ✓ | Transparent pricing. Do you understand the fee structure, total cost at various credit levels, and what’s included vs. extra? |
| ✓ | Section G ready. Does the firm deliver business component-level QRE data ready for Form 6765 Section G filing? |
| ✓ | State credits included. Does the engagement calculate applicable state R&D credits alongside the federal credit? |
| ✓ | CPA coordination. Will the firm provide your CPA with complete return-ready inputs and communicate directly on credit integration? |
| ✓ | Willingness to say no. Does the firm provide a free initial evaluation — and is it willing to tell you the credit doesn’t make sense if that’s the honest answer? |
Big Firm vs. Boutique vs. Software Platform
You’ll encounter three types of R&D credit providers. Each has strengths and weaknesses depending on your company’s size and complexity.
Big Four / Top 10 Firms
Best for: Large enterprises with $50M+ in QREs and multi-jurisdictional complexity. Trade-off: Highest fees, conservative credit positions, partner attention can be limited. Often better for Fortune 500 companies than mid-market businesses.
Boutique Specialists
Best for: Mid-market businesses ($500K-$50M in QREs) that want senior-level attention, industry expertise, and competitive pricing. Trade-off: Smaller firms may have less geographic reach. Look for firms with Big Four alumni who bring the methodology without the overhead.
Software Platforms
Best for: Simple, well-defined engineering activities with credit values under $100K. Trade-off: Automated platforms can miss qualifying activities that require human judgment. Limited strategic guidance on Section 174A coordination and state credits. No one to call when the IRS examines.
Ready to Talk? Here’s What to Expect From Us.
We start every engagement with a free evaluation. We’ll review your activities, estimate the credit potential, and give you a straight answer on whether a study makes sense. If it doesn’t, we’ll tell you. If it does, we’ll explain exactly what the engagement looks like — scope, timeline, deliverables, and fee — before you commit to anything.
Frequently Asked Questions
Can my regular CPA handle the R&D credit?
Some CPAs can, but most general-practice firms don’t have the technical staff to evaluate qualifying activities across industries. The R&D credit sits at the intersection of tax law and engineering — a combination that requires specialized expertise. The best approach for most businesses is a CPA-specialist partnership where your CPA handles the return and a specialist handles the study.
How long does a typical R&D study take?
Most studies take 4-8 weeks from kickoff to final report. The timeline depends on your responsiveness in providing data and scheduling technical interviews. First-year studies take longer because the firm is learning your business. Subsequent annual studies are faster because the framework is established.
Should I worry about switching R&D credit firms?
Not at all. Your R&D credit study belongs to you, not the firm that prepared it. If you’re unhappy with your current provider — whether due to poor communication, weak documentation, or a credit that feels too aggressive or too conservative — switching is straightforward. A new firm will review the prior study, identify gaps, and establish their own methodology going forward.
What should I have ready for the initial evaluation?
For the initial conversation, you just need to describe what your company does and the types of technical work your team performs. No financial data is needed upfront. If the initial evaluation suggests the credit is worth pursuing, the firm will then request payroll data, project lists, and access to your technical staff for interviews. The initial call is typically 15-30 minutes and is free with any reputable firm.
What Should You Do Next?
If you’re evaluating R&D tax credit firms, use the seven questions in this post as your scorecard. Ask every firm the same questions and compare the answers. The right provider will have technical expertise in your industry, include audit defense, deliver Section G-ready documentation, calculate state credits, coordinate with your CPA, and give you a straight answer about whether the credit makes sense.
If you’d like to start with us, schedule a free evaluation. Or take our 60-second qualification quiz first to see if your business is a likely candidate.
Learn more about R&D tax credits →
Understand the IRS four-part test →
How to prepare for an R&D credit audit →
Martin Gamez
Founder, Tax Formulations
Martin is a tax credit specialist with over 25 years of experience in federal and state R&D tax credits, cost segregation, and business tax incentives. His background includes tenure at Big Four and Top 10 accounting firms, where he developed the methodology and audit defense practices he now applies for clients across technology, manufacturing, aerospace, engineering, construction, and life sciences. Read full bio →