Harper didn’t approve R&D credits — it made weak claims more dangerous. Here’s what it actually means, and why the firms that win audits build their defense before they file.
R&D Tax Intelligence
February 23, 2026
Many design-build and construction firms now cite Harper v. Commissioner as proof that R&D credits are available for design and construction work. That reading is wrong — and it is becoming dangerous.
The Harper case involved approximately $46,656 and $778,610 in claimed R&D credits across two tax years. What the Tax Court decided was narrow. It did not approve the credits. It did not validate the taxpayer’s methodology. It did not lower the evidentiary bar for qualification. Harper addressed a procedural failure by the IRS — not substantive eligibility.
Understanding that distinction is the difference between a defensible credit and a ticking audit risk.
In Harper, the IRS sought summary judgment by arguing that design-build activities could never satisfy the “business component” requirement under Section 41. The court rejected that categorical position. It held that the IRS could not disqualify the claim without examining the taxpayer’s actual activities and evidence.
That was the entirety of the ruling. The court did not decide whether the research qualified. It did not rule that the taxpayer met the four-part test. It did not resolve ownership, wage allocation, or substantiation issues. It allowed the case to continue. Harper forced analysis. It did not deliver approval.
This is where misinterpretation sets in.
The burden of proof remained with the taxpayer. The qualification standard did not soften. The taxpayer still must demonstrate technical uncertainty, experimentation, and qualified purpose through credible, project-level evidence. Harper did not excuse weak documentation or post hoc reconstruction.
Surviving summary judgment does not equate to surviving audit, trial, or appeal. Harper preserved the process. It did not predetermine the outcome. And that delay can make things worse — when a claim is filed without a disciplined record, “support” often gets built later in the most dangerous way possible: rushed, reconstructed, and inconsistent. That is exactly the pattern IRS exam teams and courts punish.
Here is what Harper effectively guarantees: if the IRS cannot win on a blanket legal argument, they will win — or adjust — by testing your facts.
In modern R&D exams, “facts” means two things: complete, traceable data (your full project universe and how it ties to claimed QREs), and a methodology that holds up — especially when sampling is used.
For design-build and construction firms with many projects, sampling is often necessary. But sampling without discipline is where claims die. A defensible claim requires:
In other words: the IRS will review facts — so you must be ready with facts, built before the exam begins, not during it.
Harper should be read as a correction, not a green light. It prevents the IRS from skipping factual analysis, but it leaves the evidentiary burden intact. Firms relying on Harper as a substitute for disciplined documentation are relying on procedure to overcome substance.
Procedure is not proof — and courts have made clear they will look past the former to evaluate the latter. The firms best positioned after Harper are the ones who were already building defensible records. The firms most at risk are those who read the ruling as permission they do not have.
Most firms think about audit defense when the IRS letter arrives. National Tax Group and TaxDrone.AI build the defense the day work begins — so if a review comes, the file is already complete, consistent, and court-ready.
That is not a subtle difference. It is the entire game.
We document R&D credits the way they must be defended — from the start — so the IRS review, if it comes, finds a file that was built for exactly that moment.
Every engagement begins with a rigorous eligibility filter against current case law — including Harper. Activities that cannot withstand factual scrutiny are excluded before a credit is ever claimed.
TaxDrone.AI captures the evidence as work happens — not reconstructed after year-end, not assembled under audit pressure. The platform continuously checks against evolving IRS guidance so your substantiation keeps pace with what courts are actually enforcing.
National Tax Group & TaxDrone.AI
Harper did not make R&D credits easier. It removed a shortcut the IRS should never have used — and in doing so, it made the facts the only battleground. If your documentation is weak, Harper just guaranteed the IRS has to find that out the hard way, in an exam where the costs fall on you.
If you are relying on Harper to justify a claim, you are relying on procedure instead of proof. If you used another provider and are uncertain whether your file was built to the standard exams actually require, that question is worth answering before the IRS asks it for you.
Complete data. Statistically supportable sampling. Documentation standards designed to meet and exceed IRS and court expectations. See the process that makes “never lose an audit” a real outcome — not a marketing claim.
