Records that answer the question
- Work-location assignments by employee, with changes during the year.
- Payroll work-location and state withholding codes.
- Facility access or badge records for periods in dispute.
- For physical testing, where the equipment is.
- Travel records for engineers who visited a facility for part of the year.
Remote and hybrid work
An engineer whose withholding is in another state but whose wages are in the state wage base is the most common state finding. Apportion by days worked in the state on a consistent basis, and keep the evidence. The mock audit marks S2 as a red flag for this reason.
Foreign research
Research performed outside the United States is excluded from the federal credit. Contractors working abroad are excluded in the same way.
State rules
Note.State location rules differ. The mock audit applies a state's rule only where the state program is in the credit database; otherwise the state track is unassessed.