I'm guessing that this will result in many employers reclassing many engineers into COGS, S&M, G&A, etc (in other words, not calling their work R&D).
This is relatively easy to do. If an engineer is fixing bugs, helping support team, helping sales in any way, participating in customer onboarding, keeping the servers online, etc, a company can argue the engineer is a cost of doing business rather than true "R&D".
In reality, the % of time most engineers spend exclusively on 100% new products is much smaller than you'd assume at face value. Even at a young startup, I'd guess at most 50% of the work is true R&D.
To reiterate, things like devops, managing infrastructure, patching servers, upgrading code, fixing bugs, professional services, etc... none of that is R&D and it's pretty easy for a small company to say that the majority of their engineering expense is not R&D (extremely difficult for the IRS to argue otherwise if they audit a company unless detailed timesheets are kept).
Edit: I'm not an accountant, but pretty familiar with R&D / IRS stuff
This is relatively easy to do. If an engineer is fixing bugs, helping support team, helping sales in any way, participating in customer onboarding, keeping the servers online, etc, a company can argue the engineer is a cost of doing business rather than true "R&D".
In reality, the % of time most engineers spend exclusively on 100% new products is much smaller than you'd assume at face value. Even at a young startup, I'd guess at most 50% of the work is true R&D.
To reiterate, things like devops, managing infrastructure, patching servers, upgrading code, fixing bugs, professional services, etc... none of that is R&D and it's pretty easy for a small company to say that the majority of their engineering expense is not R&D (extremely difficult for the IRS to argue otherwise if they audit a company unless detailed timesheets are kept).
Edit: I'm not an accountant, but pretty familiar with R&D / IRS stuff