Employee Retention Credit and R&D Opportunities

Fortunately, many activities in the hospitality industry can quality for the R&D tax credit. The R&D tax credit is a tax incentive for companies that incur R&D costs in the United States, therefore allowing a company to offset its U.S. tax liability. Below are the most common qualifying activities for the hospitality industry:

  • Software Development – Typically, most hotel groups have their own homegrown software footprint. Software development activities are likely to qualify for the R&D Credit.
  • Process Improvements – Many process improvements in the hospitality industry may lead to developing software and hardware tools (e.g., keyless entry). For example, many hospitality companies made technology improvements in response to COVID-19 process changes. Such activities may quality for the R&D credit.
  • General Qualification Criteria – Activities in engineering, technology, biological sciences or physical sciences performed to achieve new/improved functionality, performance, reliability or quality is likely to qualify as R&D, specifically when the activities are conducted to resolve technical uncertainties through an iterative process of design, development and testing/experimentation.

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