Internal Revenue Service Updates R&D Tax Credit Filing Requirements
Written By: Tanya Donnelly, Managing Partner
Introduction
In recent days, the Internal Revenue Service (IRS) has issued updated guidelines for amending R&D claims and released a revised draft of Form 6765, Credit for Increasing Research Activities. These updates aim to ease the burden on taxpayers when submitting their claims.
Updated Draft of Form 6765
On June 21, 2024, following feedback from external stakeholders, the IRS released an updated draft of Form 6765. A significant change is the optional reporting of Section G, Business Component Information, for companies meeting specific criteria:
Qualified Small Business (QSB) taxpayers, as defined under sections 41(h)(1) and (2), who claim a reduced payroll tax credit.
Taxpayers with total qualified research expenditures (QREs) of $1.5 million or less at the control group level and gross receipts of $50 million or less, claiming a research credit on an originally filed return.
For companies not meeting these criteria, the updated form requires reporting 80% of total QREs in descending order by business component, up to a maximum of 50 components. For Tax Year 2024, Section G will be optional for all taxpayers to facilitate the transition to the new requirements, with full implementation starting in Tax Year 2025.
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Updated Amended R&D Claims
On June 18, 2024, the IRS announced the waiver of certain guidelines for amended claims postmarked on or after June 18. The waived requirements include:
The names of individuals who performed each research activity.
The information each individual sought to discover.
This decision stems from the IRS's extensive experience with the Research Credit refund claims process. Although these details are no longer required with amended claims, the IRS may still request them if the R&D credit is selected for examination.
Conclusion
These changes demonstrate the IRS's responsiveness to feedback and its efforts to reduce undue burdens on companies. This underscores the importance of partnering with a specialized R&D provider to ensure full compliance with IRS requirements.
Contact R&K Partners today to schedule a meeting with our team and initiate your R&D Tax Credit Study.