Why would my company need a tax credit services provider?

Large companies, with teams of accountants and tax lawyers, probably have enough skill in their finance and human resources departments that outsourcing offers little benefit to them. But for small-to-medium sized companies there may be an advantage in bringing in expert help to make sure that any tax entitlements are claimed.

In some special employment zones, you can claim up to three-times the normal tax credit for your employee, and some industry sectors, such as food retail, are far more likely to employ eligible workers.

If your company is using a CPA, either within your company or contracting with a local vendor, you can be pretty sure that your tax paperwork is going to be completed accurately. But some credits are an ongoing task, in need of attention for several months after you hire an employee, which is something that your CPA may not have the resources to manage—remember, tax credit compliance is an HR function, not an accounting one.

Outsourcing can save a lot of time tracking credit eligibility if you hire a couple of dozen or more new employees, but if you only hire a handful of new people each year, it can be worthwhile doing the paperwork yourself. The time your HR people spend on the phone getting help from the IRS, and from the Department of Labor will usually be more than offset by the tax credits you end up claiming.

If you do outsource, using a company that specializes in tax credit services is the best way to make sure that all of the available tax credits your company is entitled to are claimed. Tax credit services providers are often staffed by former IRS employees, human resources professionals, and CPAs—this gives them an advantage in understanding the way the IRS will most likely interpret how new tax credits can be applied. The reputations of these companies are linked to their ability to maximize the tax credits your business is able to claim, and so they need to be up-to-date with any new tax breaks that your company may be eligible for.