What Can Toy Story 5 Teach Us About R&D Tax Credits: Technology Is Powerful, But People Create Innovation

Every time a new technology arrives, someone asks the same question:

Will this replace people?

That question appears to be at the heart of Toy Story 5. The story centers around toys competing with children’s growing fascination with electronic devices and technology.

It’s a timely theme.

Businesses everywhere are asking similar questions about artificial intelligence, automation, and digital transformation. Tax departments are no exception.

Can AI conduct R&D interviews?

Can software replace engineers?

Can automation create better documentation?

The answer is surprisingly similar to the lesson Toy Story has always taught:

Technology is valuable. Relationships are irreplaceable.

The same principle applies to successful R&D tax credit studies.

Technology Is Changing the R&D Tax Credit Process

There has never been more technology available to support tax departments.

Companies now use:

• AI meeting assistants
• Microsoft Teams
• Slack
• SharePoint
• Project management software
• Engineering documentation
• ERP systems
• GitHub
• Azure DevOps
• Jira
• Copilot and Perplexity

These tools make collecting information dramatically easier than it was even five years ago.

That’s a tremendous advantage. But they don’t replace the most valuable source of information. People.

The IRS Doesn’t Audit Software

During an IRS examination, agents are not simply reviewing project lists.

They’re trying to understand questions like:

• What technical uncertainty existed?
• What alternatives were evaluated?
• Why did existing solutions fail?
• What experimentation occurred?
• Who made the engineering decisions?

Those answers don’t live inside software. They live inside the engineers, scientists, software developers, product designers, chemists, manufacturing specialists, and technical leaders who actually performed the research. Technology stores information. People explain it.

AI Can Organize Information

AI has become incredibly good at:

• Summarizing meetings
• Organizing documents
• Searching thousands of files
• Identifying patterns
• Drafting narratives
• Creating timelines

Those capabilities save enormous amounts of time. But AI only works with the information it receives.

If engineers never explain why they tried four different manufacturing methods before finding one that worked, AI cannot invent that story.

If software developers never describe why an algorithm repeatedly failed before succeeding, automation won’t know.

The quality of an R&D study still depends on the quality of conversations.

The Most Valuable Asset Is Your Subject Matter Experts

Every company has technical experts.

Sometimes they’re:

• Senior engineers
• Manufacturing managers
• Software architects
• Product development leaders
• Scientists
• Process engineers

These people possess knowledge that often exists nowhere else.

Unfortunately, traditional R&D tax credit studies frequently treat SMEs as obstacles.

Long questionnaires.

Repeated interviews.

Multiple follow-up emails.

The result?

Poor participation.

Incomplete documentation.

Credits left on the table.

Technology Should Remove Friction

The best R&D tax credit process doesn’t ask:

“What software should we buy?”

Instead, it asks:

“How can technology make participation easier?”

Imagine using Microsoft Teams to:

• Schedule interviews automatically
• Collect project documentation
• Record technical discussions
• Organize supporting evidence
• Track open questions
• Notify engineers automatically

Notice something?

Technology didn’t replace the engineer.

It made the engineer’s job easier.

That’s exactly how technology should work.

Collaboration Creates Better Credits

An R&D study isn’t a tax exercise.

It’s a collaboration exercise.

Engineering understands uncertainty.

Manufacturing understands process improvements.

Software developers understand experimentation.

Finance understands costs.

Tax understands Section 41.

Each department owns one piece of the puzzle.

No software platform can replace that collaboration.

Why Companies Leave Money Behind

Many organizations believe they have an efficient process because it is highly automated.

Yet they still miss qualified activities because nobody asked the right questions.

Automation finds documented work.

Conversations uncover undocumented innovation.

That difference often determines whether companies maximize their credits.

The Future Is Human-Centered Technology

The companies seeing the greatest success aren’t choosing between people and technology.

They’re combining both.

Technology handles:

• Organization
• Workflow
• Scheduling
• Documentation
• Search
• Automation

People provide:

• Technical judgment
• Engineering decisions
• Experimentation
• Problem-solving
• Innovation

Together they create stronger documentation, larger credits, and smoother IRS examinations.

What Toy Story 5 Reminds Us

If Toy Story 5 explores the tension between technology and relationships, it highlights a lesson that business leaders should recognize immediately. Innovation has always been driven by people, and while technology can amplify their capabilities, it cannot replace them. The same philosophy applies to the strongest R&D tax credit process. AI, collaboration software, and automation are valuable tools that make the process more efficient by organizing information, streamlining communication, and reducing administrative work.

However, they should never overshadow the people who make innovation possible. Engineers, software developers, scientists, and manufacturing teams are the ones who identify technical uncertainties, experiment with new ideas, solve complex problems, and create the advancements that qualify for the R&D tax credit. Technology supports the process, but people create the innovation—and they’re the reason the credit exists in the first place.

At MASSIE, we believe technology should make the R&D tax credit process easier—not more automated for automation’s sake. The goal isn’t to replace conversations with subject matter experts. It’s to make those conversations more productive, better documented, and less disruptive.

Because at the end of the day, the best R&D tax credit process isn’t just a technology process. It’s a people process.

Peter Green

As MASSIE’s CEO, Peter is responsible for the company’s growth and client experience initiatives that make the R&D tax credit process easier, generating larger credits and ensuring smoother audits. His innovative strategies at MASSIE, ...