Using the R&D Tax Credit to Recover Tens of Thousands in Overpaid Taxes with Robert Curtiss

About this Episode


The R&D Tax Credit is a valuable tool for HVAC business owners. In this podcast, you’ll learn how to take advantage of the R&D tax credit and recover tens of thousands in overpaid taxes.

Robert is National Account Manager for Business Group Resources, a specialty accounting firm. He brings to his work a long and successful career as a small business owner, trainer and speaker, and consultant to small and mid-size businesses in the areas of marketing, operations, and organization.

Email: [email protected]



We’ll be discussing:

– What is the R&D Tax Credit?

– What kinds of businesses are eligible for the tax credit?

– I thought it was only for companies who invent something new…Why haven’t I heard about this before? Why didn’t my CPA tell me about it?

– Aren’t R&D Tax Credits too complicated and expensive to get?

…and more!

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Audio Transcript

Business ownership and financial freedom by sharing stories and advice of experts who can help you get there. Now your host john victoria, hello and welcome everybody to the HVAC financial freedom podcast, a podcast for HVAC business owners who are looking to take their business to the next level their finances as well as their life. And so I'm very excited to welcome for everyone today, a very special guest mr robert Curtis of the business group resources and so um to kind of intro him before I get into his actual intro, the reason why I was so excited to share you with, share him with you today is that we were talking about a credit that uh companies can use in order to recover their profit.

And so he gave me this case study was an HVAC company. I believe you said it was $4. 5 million a year in annual revenue, about 23 employees and you guys were able to help them recover over $60,000 and you know that's some serious dough, right? That's that's you know, they can invest back into the business that's no that you can put you know, just into the bottom line or it could be things that can invest into your infrastructure and training. And so because of that I was so excited to share what this was all about and how business owners can use this to grow their business and take back profits that are already there's that is just locked up because they had paid in taxes.

And so as a quick intro, you know robert is a national account manager for business group resources and they are a specialty accounting firm and what he does is he brings to his work a long and successful career as a small business owner, a trainer, a speaker consultant to small and medium sized businesses in the areas of marketing, operations and organization. And just prior to this we were talking and hashing things out about B and I. He's, he was a previous director consultant on B and I and he is a centrist city certified business coach.

So welcome robert. I'm so glad to have you on the show. I'm very glad to be here, john looking forward to our conversation. Awesome. So yeah, I guess just to kick things off, I think that a great place to start would just be your story, right? You have a long history working in business, you know, you, we talked briefly about how you used to help with your working with the business brokerage, but you know, what's your story like how did you get to helping with the with this credit?

Well it's a long story and it starts with a master's degree in philosophy and when I got out of school with that, I'm like, now what the heck do I do? It didn't really prepare me for a whole lot. Um I I've had a number of different positions right out of school, a friend and I started a wholesale natural food distribution company. So that's how I learned mostly by trial and error about operations and marketing and business. But it was pretty successful after 10 years we sold it to a large grocery chain.

Uh and then I I've moved on from there and I've just been involved in business since then. Um Usually kind of working other people's problems. Um Either on an operational level or marketing level, some process mapping. Uh So yeah you mentioned the the business brokerage uh partner and I had a business brokerage. We're doing a lot of customer facing businesses. And I was also working with the R. And D. Tax credit at the time when I met business owners where the R. And D. Tax credit was applicable I'd say hey get this.

You know you can you can recoup some cash that you'd already paid out in taxes uh and drop it to the bottom line is going to make the business more profitable. Uh You know and it will help you. So what happened a few years ago just before or just when Covid hit is I live in pennsylvania and the government shut down companies like real state companies and other companies where you had to show properties indoors. And of course I had a visit with prospective buyers to sellers businesses.

So it got shut down. And then also as I mentioned to you before um a lot of the businesses we worked with just went out of business or were difficult to sell because take a dry cleaner usually you look at the last three years profit and what the business owner has taken out and that's how you look at the value of the business. Well if a dry cleaner if nobody's going to work anymore to go into the office and you can wear the same shirt 100 times, what's the future value of that business?

So uh the partnership dissolved and uh I started doing the R. And D. Tax credit full time because I found a number of things. One I could do it nationally and remotely. Also especially with Covid it was really helpful to owners who needed some cash. Uh And just in general I find that it's it's much more rewarding working with small business owners and helping him recover taxes they never should have paid, it's their money they should keep it to build the business or buy a sailboat. It's up to them.

Oh yes and that's that's that's the thing that surprised me so much. Like when we first started chatting about this um Like I can't believe that there's money that is owed to you that currently exists, you just don't know it's yours, it's just sitting in the government's bank account. And so it's it's it's crazy but before we hop I I didn't know about, are you selling to the large grocery chain? Like what's I I gotta, I gotta press rewind real quick. That's that's awesome. That was very interesting.

It was, I got out of school, I had no idea what the heck I was going to do with my life at that point. And I went to a wedding, my girlfriend's friend's wedding and I was seated at a table Next this guy, we started talking and he said, yeah, I'm starting to like do a little food distribution company, wholesale food distribution and natural foods. So, um, I said, you know what, I got to look for a job and it's really gonna just gonna be a drag just doing that day in and day out, I'll help you a couple of days a week, you know, while I'm looking for a job.

Well 10 years later we were still together. I never found another job. So we went from a ford econoline van in the garage to a 30,000 ft square wear square foot warehouse, uh, a few straight jobs and, and a couple of step master vans. And uh, and this was pre whole foods when there were a lot of like little local, uh, natural foods and health food and vitamin shops around and that's who our customer base was. Um, and then a pretty large distributor came in one day and said, hey, we really like what you're doing here.

We would love to buy the goodwill of your customer list or we can drop our prices for six months and you'll be out of business. It was an offer we couldn't refuse. Oh my gosh, but you really saw from the, so the ground up, so you see inception really just getting off the ground marketing sales of film it all the way to getting a nice, imagine a nice payout at the end of it. It was yeah and like all sorts of things you sort of like never think of like, you know, the the more our volume was, the more we could drop our freight costs, we could go from, you know, L. T. L. Two, you know full truckload or on juices.

We actually brought in a rail car, you know, we were able to sell enough to bring a railcar in and store it in the warehouse. So yeah, a lot of things that people on the outside don't think of, you know in terms of business and unfortunately a lot of people on the inside don't look at some of those operational cost savings things. Yeah, learned quite a lot. It's beautiful. Yeah, the economies of scale, right? You do that and um yeah that's that's that's very impactful. Um and so you said 10 years, so you're about 30 32 at the time, right?

Where you said right out of college was late twenties. Yeah, wow that man, so many people wish to be in your position right late twenties, not even thirties yet sold the business. That's that's amazing. It was fun. It was a lot of fun. Yeah. You know, and just went on from there, I will say, Um, that we had about 32 employees. And after that I always liked businesses with no employees. You know, employees are really important. I just, I marvel at the small business owners I talked to and what's amazing about them is they have the audacity to think that they can build something from nothing and they're willing to take on the responsibility of knowing they have employees who depend on them and their families depend on them, um, and making that payroll every week and that's a real responsibility.

So I, I just, I really appreciate kind of that attitude and, and kind of strength of character and will that business owners have that, that they do that. And I know a lot of the listeners are those business owners and you know, I just, I mean, both me and robert just like, thank you. It, it takes such grit to get something off the ground things going and then the responsibility, it can really weigh on someone because it's, yeah, family's lives and their kids and they're fine financial security that it's dependent on the business.

And so, um, yeah, more power to all all you are listening who are the business owners, like you guys really are, you know, making a difference in people's lives. It's in your employees and it's in your team, it's in, it's in the community. So they're the backbone of most small, most communities, small businesses like that. Amen to that. Yeah. And so so I guess um, I'd love to hop into the credit now because now knowing that we got, we got this background. It's crazy like I love, I love the story uh, start the selling and, and now it's taken us to today where um, there's this missing or untapped opportunity for a lot of business owners.

And so maybe just to start things off like what what is this R. And D. Tax credit. Yeah. Yeah. Let me give you a tiny bit of history and that, that, that will help explain it. In 1981 we were having a really difficult time competing against foreign auto companies, you know, the American auto companies, they just, you know, having a rough time against Toyota and Nissan and and the others. So the government stepped in uh, with a temporary tax credit called the research and development tax credit. And the idea behind it was to help support the car manufacturers and help keep jobs on us shore's.

Well, it can, it kept getting renewed and renewed. I mean 42 years later, it's still here, right. The temporary tax credit. But somewhere along the line it was made a permanent part of the tax code. And then also as the years went by it broadened and changed but they never changed the name. So it's still called the research and development tax credit. And that's why a lot of people don't know about it or don't take advantage of it. I mean when most people think they hear R. And D. Tax credit they're like what's that got to do with me?

Nobody in my company like you know wears a lab coat and walks around with a clipboard. So matter of fact the Wall Street Journal did a poll I guess about five years ago now And they found that 90% of companies with 50 employees or fewer who are eligible for the credit don't know about it or don't take it. And a lot of it is just you know because they hear the name and if they got doesn't have anything to do with me um before you go out and shoot your C. P. A. Let me defend C. P. A. S. There are 70,000 pages in the tax code.

Nobody knows all of them. And your C. P. A. Does a great job. He or she files your year end. They file your quarterly's you know they give you some tax advice but they can't know every little thing and be really familiar with how to use everything in the tax code. So I usually tell people were sort of like a specialist if you go to your primary doctor and you have this like really bad rash he or she is going to say you know what I'm gonna send you to a dermatologist. Right?

So we're the dermatologist were the specialists and and that's all we do. We don't compete with your C. P. A. We don't replace your C. P. A. We do this one job and then we're out of there and your C. P. A. Takes care of your day in and day out. I love it. So C. P. A. Let's imagine that more of like I don't know your your primary care physician and then you need some specialists who, I mean that that's a long dock. You know tax code.

They built it so we can understand all of it. It's changing all the time too. It's not like it's a moving target, you know. Exactly. So I mean we we center on like just a few little pages of the tax code. We know it really well. We've been doing just that for But 20 years now and your C. P. A. Has got to deal with everything. So he or she is a generalist. So so it would always be in supplement to our Cp. It's not exactly we never replace the C. P. A. We don't compete with C. P. A. S. As a matter of fact some firms farm out the R. And D. Work to us because it's labor intensive and they know that we're going to do a better job than they are and they're spending their time better working with their clients day in and day out?

Gotcha. Yeah it's just too too niche just got it and in terms of businesses so what types of businesses are eligible? I think obviously we know each track businesses are eligible but for anyone else who might be listening like what who's like encompassed in that I I know that definition is expanded over time. So yeah this is sort of a clunky definition. It's mine but it works but if a company is solving individual problems for a specific client and they're not off the shelf like one size fits all then it probably works.

So certainly for manufacturers that's where it all began. Doctors, Dennis veterinarians. Almost anybody in construction including H. Vac solar you know plumbing and the rest um And it also companies like I. T. Companies right there solving individual problems for each of their I. T. Clients. So I sort of joke with people either. Three companies types of companies that can help are non profits because they don't pay taxes and restaurants and retailers because all those chefs might argue with you a lot of it's just product and product out you know so that so yeah majority of so that basically anyone who's I imagine anyone who's watching this would most likely be eligible.

Yeah anybody in H. Back I've never met an H. Back company that was ineligible. Perfect or you know construction company and if anyone has any questions of course you know we're gonna provide roberts information at the end of this, you can reach out um ask any questions, see if you're eligible and if it sounds right for you, there's there's some serious potential dough that you can recover for your business. Um And so I'm sorry, let me just say this. It's like If you recover money in taxes, you shouldn't have paid 100% of that drops to the bottom line, but if you go out and do a sale And get more revenue, you've got expenses and everything else.

Probably only 20% of that drops to the bottom line. That's like a good businesses operating. Yeah, I mean, you know, saving is always going to get you more money than more sales as a percentage. That's that's so true because yeah, you don't have the same overhead, there's no cost fulfillment, it's, it's just the money that you're dropping straight to the bottom line, wow. And and once that I was really surprised about solving your guy's website is that you're recovering $4 million $4 million $1 million. Yeah, about a million dollars a week.

On average for our clients. And our clients are small businesses, I would say 90% of our clients are between two and 10 or $12 million a year in annual revenue and 10 or 11 to maybe 50 employees and they're really, you know, they're truly small businesses and for recovery, like is there like an average that a business typically recovers within that range or is it really, really vary from, it really varies in a lot of things. Um The activity specific activities of the business and then because most of the companies I work with are pass through entities as, you know, sub chapter s llcs, you know, it depends on the individual situation of the owner, you know, and other other deductions they may have and you know, uh so it really varies, but it's usually pretty substantial if I just had to do a ballpark were allowed to go back three years and look back three years.

So if I did do a ballpark, if I had a company that was doing say three million a year And had, I don't know, 15 or 20 employees we'd probably be looking at about $75,000 as an average 25,000 year, wow! 25,000 year. What just, and if you're listening like what could you do $75,000 right? You know, that's, that's money that you thought was gone, right, you paid it to uncle sam quarterly taxes and you're like, oh that's that's fine, but no, there's what could you man that you could do a lot with 75,000, yep, wow, That's insane.

Um Okay, so let's say that I wanted to recover that $75,000, like what what would the process look like with working together with you? Like how would we start? Like what would be needed to get started? Like what does that process look like? We try to keep it pretty simple because we know that with most small businesses there's not like a lot of layers of management, you know that the owners time is valuable, right? You know he or she doesn't have time to take a lot of time out to look at this.

So I start with about a 15 minute conversation where we do the 30,000 ft overview of what it is. I'll answer the person's questions and then ask a couple questions myself to make sure it's a business that fits. Um And then after that we know whether do we, you know is it worth going ahead? Do they want to go ahead or not? If they want to proceed? The next step is about a 30 minute conversation And there I'll do a deep dive into the business in terms of asking about specific activities and you know do they do this, do they do that about you know some operational stuff um that takes about 30 minutes.

And then after we do that 30 minute interview uh they would upload to our secure server uh their personal and corporate taxes for the last three years. And then depending on the complexity of it, about one or two weeks later we come back with a quote saying look we looked at these and this is our estimate of what we can get back for you and they can choose to walk away and say you know what I'm leaving money on the table. Or they can say hey let's go ahead and recover that money.

So at that point um we take a percentage of what is recovered and um we file amended returns and then uh you know the return, you know the the refunds will come in. Now. I wanna truth in advertising here. I wanna tell you since Covid the I. R. S. Is really really slow. So it used to be 4 to 6 months for refund checks to come in there get a little bit better. But during the worst of Covid it was like 8 to 12 months so that money does come in.

But they've just been slow as molasses. The upside of that is from the day that that amended return is received from them until the day they cut that refund check, they pay 4% interest and most people are not getting 4% anywhere these days. Yeah. My ideal savings account. I think it's getting 1% right now. Oh my gosh. Four so it's a 4% and it's almost in your interest right? Yeah. Yeah. Keep it slow. You know I know the IRS hired like 70,000 agents or something recently like keeping the hiring process. You guys are gonna take your time.

That's incredible. So it's a pretty simple process. I would say that the entire amount of time and business owner has to spend with me over a few meetings is hour to an hour and a quarter tops. And it sounds like there's no risk at all to write. Because if it is it is there is there an application fee or is it just, you know, again just you know that fully tell you, we we we take a percentage half of that percentage we take when somebody says, yeah let's go ahead.

And the other half we take is the checks come in. Now, if the refund is different than what we originally said, then we would refund anything that we took at the beginning, you know that you know that if we took too much, but um if there's no recovery, there's no cost. But we have been doing this for 20 years And that's why I want to have that 15 minute conversation. I don't want to waste somebody's time theirs or ours. If it's not a business that's gonna fit. And when we come up with that estimate, they're just, it's like a few dollars off what our final numbers are and we've gotten pretty good at this.

So you know, it's not like a really wild estimate, it's pretty dead on, Wow. So just to recap for everyone who might just be happening right now. So we got $3 million $75,000, there's really no risk at all to you. It's gonna be percentage only you know if you decide to move forward and they are able to recover it. Got about 20 years of experience, you know no big deal. Um it's it's it's almost like a no brainer. Yeah I mean the money's there for small businesses the small businesses really deserve to have it.

And it's just you know kind of like one of those best kept secret sort of thing. And it's because of the most mostly because of the name. Yeah just the label. Um And I guess this could be this is I think it's an obvious question. But um so if someone's running a business at a loss over many years right they're not, no matter what, they can't do nothing to recover right? They haven't had to pay taxes. Yeah. So if you're if you're running things that are lost there's this there's no shot.

You get this. But if you are profitable you are large enough then there's possibly money that that you can recover through the R. And D. Tax credit. If you're an H. H. Back or you know in general construction or something else and you're paying taxes. There's probably money to get back. If you're not paying taxes, well no there's nothing to get back. I love that. So so I guess just the transition so let's say that we let someone let's say someone gets that uh that that money back.

Some of the things that you've seen in terms of growing people's businesses, like what, what have you seen like people do with that money. Um, you know, we, we talked about a few ideas in the past, but is there any common things that people usually reinvested back into? Well, yeah, the funny thing that I mentioned before, you know, it was one guy bought himself a new sailboat, right? But most business owners invest it back into the business. I've seen some try to enrich some of the benefits for their employees because especially these days if you got good employees, you want to keep them. Yes. Right.

I mean, it's really hard to find good employees these days. So some folks have looked at benefits. I've had other guys just gotten by one more truck because they have not been able to take on more jobs because they just didn't have the ability, they didn't have another truck to put out there on the street. Um, you know, so sometimes it's replacing equipment. Um, I actually had one who was still doing a lot of stuff on paper and um, they took the money, they put in a whole new computer system, all their service technicians got ipads and everything in the company was now in real time and in the cloud.

So, you know, estimates billing, you know, parts inventory, just everything. So I mean that was huge because now they also had all the information to, you know, to look at the metrics of the business and know where there was waste, where they can improve. So it wasn't just a matter of better record keeping, it was providing a tool as long as it's used, you know, when somebody's really evaluating the information to really grow the business substantially. But yeah, most, most folks put it back into the business.

You know, whether it's in just again, you know, whether it's an inventory equipment or in changing and upgrading some processes. Yeah. And also the other one, I'm biased on this one, it would be marketing, right? Sorry, I should have mentioned that. Yeah. I mean, I mean, that's really important, right? Marketing your business. Uh, it's funny, it's the thing that people usually drop the first, right? I mean, and when money gets tight, that's the last thing you wanna drop because people think of it. It's a it's a cost center.

You know, I'm paying somebody to do my marketing. No, it's not. It's a profit center. It's bringing people in the door, right? I mean, you look at the return on investment and if it's bringing people in the door is bringing people to you instead of your competitor, you don't get rid of something like that. Yes. It's it's it's a beautiful thing, right? Just, you know, this money that's already yours reinvested in going back to business, you only get more markets here. You get further ahead. It's it's really a virtuous cycle with all of this and I guess one other question would be so let's say someone does get this R. And D. Tax credit one year it goes three years back.

What about the future? Is this something that someone should do on a regular basis where next year they recover again and it actually gets better in the future. And I'll tell you why because when we do that three year look back we're looking at historical documents right? Somebody's already filed their taxes. We can't change those numbers. We have to take those numbers and you know get what credit we can based on that going forward. We would work with your accountant. So before he or she files the corporate and the personal returns they would send them to us to take a look at you know along with the R. And D. Information that we gather from the you know client.

And then we would prepare the R. And D. Credit tax form handed over to your accountant who would include it in their filing. So when we get in there on the ground florida so to speak before it's written in stone we can usually get substantially more R. And D. Credit for the for the client. And for then instead of waiting for a refund they get to cut a smaller check to the I. R. S. So this this is not an H. Back uh contractor but I was recently working I guess it was like in june or july because they got an extension on their corporate but anyhow I was working with a remodeling contractor, he does like mother in law suites, you know add ons that sort of stuff.

And um He let's see. I'm trying to think I think he's close to around six million a year and I'm not sure how many employees, I don't remember now, maybe about 30 employees. But We we did a work up for him to hand over to his accountant and he was able to write a check $65,000 smaller than he would have to the i. r. s. at the end of the year. And and it would have been less in R. And D. Credit if we had been doing a look back on it.

But it can be a really significant savings. So. Yeah. No it's it's a it's a yearly thing and again it's a permanent part of the tax code now and because of the whole issue of supply chain and bringing as much business back to this country as we can instead of doing overseas. I think this tax credit is only going to strengthen, it's not going anywhere because it's it's really a jobs program. The idea is if the government gives you this money to help make your company more competitive and healthier and to grow it you're gonna have more employees, the company is gonna grow and they're going to pay more in taxes so that you know the government will end up getting their share.

Oh yeah always get their share. Uncle Sam got to get his cut. So amazing. So um yeah it's it's I can I think of it more like uh like you need to get your doctor's appointment every year but if you don't go like you know you won't die but like if I mean you're you're missing out on a lot of these big benefits and so you know once you let's say get your check up, you know you got your look back over the past three years now like you got to go to the doctor every year moving forward to keep yourself healthy.

You know retain that profit and just continue to reinvest be able to reinvest in the business. Not pay as much to to Uncle Sam that's that's a big name of the game. Just keep your mind contractor is working or watching this. They have a contract with their clients to come and check their equipment each year right to do an annual checkup to make sure it's operating well, it's cleaned. I mean we do the same thing, let us look at it each year and if there's something to be had great you're gonna benefit if there isn't nothing lost, wow, let's get that money robert, this is this is so fun just talking about the R. And D. Tax, I never thought I would ever, you know, you know what I mean?

I love talking about it, it sounds like the most boring thing in the world, who the heck wants to talk about taxes, but I see what it means to the small business owners I work with and it just makes a huge difference to them. So yeah, I love it, I love talking to the business owners and I love working with this. It really helps folks, me too. And you know, whoever's listening watching, um you hope this is helpful. Um I think that when we pushed too close to the podcast, but it was, you know, I think this is something that if you're not taking advantage of now um this is something you should look into, reach out to robert.

Um as as we spoke about there there's really no risk to you and there's potentially profit again that is locked away that you can use to reinvest especially in a time like now, you know, this is you know, august 2022 you know, looming, you know recession or are we curling and people say different things, but now it would be a great opportunity to recover that profit, Be able to reinvest into your team, especially with like hiring nowadays, like be able to retain your employees and and grow your business if you want to reinvest into marketing.

So this is like a strategic time. Um so if you guys again are, you know, want to reach out, you know, robert, how would they get in contact with you if they wanted? Well, a couple of different ways, I've I've got a really difficult email address. It is robert, B as in boy Curtis with two S. S at business group resources dot com, a little bit easier is on linkedin, I'm robert Curtis with a green check mark after my name, or they can just text or call me um 2673357835.

Got it. And robert will also include all of your contact information in the show notes. And so if you're listening to this, you know, after you've recorded this, it'll be in the show notes, the description, so you can reach out to to robert, and I highly suggest that you do. So I've already spoken to robert that I want to do this myself, you know, there's this profit that we need to recover and you know, I want you to benefit from that too. So yeah, before we close out robert, any final words, any words of wisdom for um you know, the different business owners on board or anything to close the loop?

Well, you know what you and I were talking about when I was working with the business brokerage, so the only thing and people probably know it intuitively, although they may not, you know, think it through is for a lot of these business owners, their businesses, the retirement plan, right, one day they want to sell it so they can retire. And Only one out of five businesses actually sells. And one reason is because the businesses aren't saleable, it doesn't stand on its own. The business owner is too important.

So I tell people get your business to a place where you could take a two week vacation and not have to call in twice a day to ask how things are going. If you can make yourself not indispensable, then you probably have assailable business and you can have a nice retirement. I love that. You know, you're putting in 2030 years of really hard grunt work, you deserve to enjoy and relax. So, you know, make sure you build a business that's available. And that's the philosophy shift. I think it's the, you know, robert Kiyosaki talks about, you know, the employee versus the business owner versus the investor self employed, the different quadrants and, and as an employee, I think folks might want to make themselves indispensable.

You know, the bosses don't let you go. But when you are a business owner and you own this asset, if you are indispensable, then how are you gonna ever stop working? Nobody wants to buy a business where the business owner hasn't taken a vacation in 30 years because he or she can't walk away from their business. Yeah, I ain't buying another job. Exactly, right, right. You know what, you're buying a business because you're sick of working for somebody else or having a job so you wanna write. Exactly, you hit it, john, I'm so excited about this again.

We'll add roberts, contact information to the show notes and yeah, we'll catch y'all on the next episode. Alright, Take care. Everyone Welcome to the HVAC financial freedom podcast, a show where we talk about business ownership and financial freedom by sharing stories and advice of experts who can help you get there. Now your host john victoria.

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