R&D Tax Credit Frees Up Capital to Reinvest
Medical Incentive Advisors makes the process easy and seamless
Michael Tran, DDS, jokes that he was "unemployable" coming out of residency because of his passion for technology. Instead of starting off as an associate, Tran opened his own practice in Houston, Texas, with his wife, Catherine Castillo, DDS, and set out to invest in himself by acquiring both the latest technology and robust continuing education. FLOSS now has multiple locations, and Tran has built a reputation as one of the most advanced dentists in the country. "We got here by taking a lot of CE and being very digitally focused," he says.
Tran estimates that he spent approximately $40,000 to $50,000 on technology during the first few years of his practice. "We wanted to focus on retained earnings and putting everything back into ourselves," he says. "Other dentists tell me they have the same fears that I did about large capital investments, but I always tell them that, when appropriately implemented, technology leads to better case acceptance."
Still, the budget was challenging at times. For example, although an intraoral scanner is now an integral part of Tran's practice, he recalls initially worrying about how he would manage the monthly payments.
Tran was aware that dental professionals were eligible to receive a research and development (R&D) tax credit from the US Internal Revenue Service (IRS), but he had heard that the process was tedious. A friend of his had pursued it but never finished because of the amount of work involved.
However, at a conference in Las Vegas, Tran met Corbin Rayburn, CEO and founder of Medical Incentive Advisors—a company that specializes in helping its healthcare industry partners recover profits using the R&D tax credit. According to Rayburn, only 5% to 7% of US businesses take advantage of the credit, which was made a permanent part of the US tax code in 2015, and he is trying to raise awareness. The credit can even be applied retroactively for up to 3 years. "This is a very lucrative tax credit," he says. "It is dollar for dollar. Business owners receive hard checks in the mail and can use the money for whatever they want."
Eligible qualified research activities must meet certain criteria as outlined by the IRS. The research activity must be technological in nature, it must create new products or improve products or software, it must have a process of experimentation to test the validity of new products/processes, and it should eliminate uncertainty.
Medical Incentive Advisors makes the process easy for dentists, who only need to provide 3 years' worth of personal 1040 and corporate 1120 income tax forms and fill out a business qualification form. The company then provides a precise estimate called a credit projection report. At that time, the dentist signs a consulting agreement and a certified public accountant (CPA) engagement letter, and the rest of the process is taken care of by Medical Incentive Advisors until a check arrives in the dentist's mail.
"We have a great team with 27 CPAs," says Rayburn, who adds that he has never had a client fail to pass an audit. "We make it very seamless and easy for the business owner to complete this process. We know how busy a dental practice owner can be."
Tran confirms that his time investment was minimal. "There was really not much work to do on my part," he says.
The cash recovered from applying the credit has helped Tran to make even more investments in his practice. He now owns two laboratory mills for fabricating full-arch zirconia restorations, and most recently, he purchased a dental laser. "We were already investing in the practice, and this is just an added benefit that allows us to invest even more," he says. Tran even brought Rayburn to his office for a full-mouth rehabilitation of his own, which was accomplished in only two visits utilizing intraoral scanning, digital smile design, and a 3D printed model for the temporary restorations.
"I work with a lot of dentists," Rayburn says, "and I can see that many are trying to catch up to what Tran is doing. With everything he does, he is investing in himself, and because of that, he is able to stay far ahead of the field. With the R&D tax credit, he has been able to receive monies that he would not otherwise have had available to further invest in himself and the practice, so he continues to be able to do things most other practices cannot."
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