Do Oil and Gas Companies Qualify for R&D Tax Credits?

by | Jun 1, 2022 | Oil & Gas, Tax Credits

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Oil and gas are two of the world’s most vital and widely used products; we use them for practically everything. Oil and gas companies succeed in such a demanding market by investing in research and development (R&D) to drive innovation and build new and improved technology. Many significant advancements in the oil and gas industry have emerged due to increased R&D activities in the United States. 

But despite the fact that Oil and Gas companies engage in major R&D activities, many do not take advantage of the R&D tax credit. Most companies are simply unaware that their operations qualify for the tax credit and that they’re missing out on opportunities to expand their businesses, hire more staff, and invest more in innovation.

What activities in the Oil & Gas industry qualify as R&D?

R&D activities must meet the IRS criteria, known as the Four-part test, to qualify for the credit.

Some qualified activities include:

  • Testing fuel combustion 
  • Offshore structure design
  • Enhancing oil & gas storage facilities
  • Developing efficient ways to refine oil & gas
  • Providing solutions for wastewater treatment
  • Developing solutions for environmental problems

Applying the Four-Part Test

  1. Permitted Purpose – Requires the project to fulfill a qualifying function that is critical to the business. The purpose can be to develop a new or improved product or process.
  2. Elimination of Uncertainty – The activity must deal with a specific technological uncertainty.
  3. Process of Experimentation – Implementation of a comprehensive method for identifying and evaluating potential solutions to attain the desired outcome
  4. Technological in Nature – The process of experimentation must rely on the hard sciences such as chemistry, biology, computer science, or engineering.

How can KPT Consulting help?

Don’t miss out on the chance to get credit for the R&D activities you’re already doing. We’ll help assess whether your company’s activities qualify for the tax credits. We deliver R&D tax credit claims that are completely maximized and stand up to IRS inspection. 

Our team at KPT Consulting will be pleased to learn more about your company and discuss how we may be of assistance.

Interested to learn more? Contact us today!

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