The IRS has released a draft version of a revised Form 6765, Credit for Increasing Research Activities, days after the agency relaxed some of the documentation requirements for claiming the tax credit, Accounting Today reported.
The IRS has tried to impose stricter documentation requirements on the credit—also known as the Research Credit or the R&D tax credit—since 2021. In an effort to reduce fraudulent claims, the agency wanted taxpayers to back up claims for tax refunds using the credit. Taxpayers and tax professionals objected, claiming that the requirements were too onerous. Earlier this week, the IRS relaxed some of those requirements, and it has now extended the date for taxpayers to "perfect" their claims for refunds tied to the credit to Jan. 10, 2025.
Along with the documentation requirements, the tax form itself has been under revision, Accounting Today reported. Last September, the IRS released a preview of proposed changes to Form 6765 and asked for comments from interested parties. The preview included a new Business Component Detail section for reporting quantitative and qualitative information for each business component, and new questions seeking various information and reordering some of the existing questions on the form. In its solicitation, the IRS asked for feedback on whether the new Business Component Detail section should be optional for certain kinds of taxpayers.
The changes to the draft form include optional reporting of Section G, which asks for the Business Component Detail. The section will be optional for qualified small business taxpayers or taxpayers with total qualified research expenditures ( equal to or less than $1.5 million, determined at the control group level, and equal to or less than $50 million of gross receipts.
In response to stakeholder feedback, the IRS decreased the number of business components that have to be reported on Section G. The amount of information that needs to be provided about the reduced number of business components on Section G has also declined.
The revised Section G will be optional for all filers for tax year 2024 (processing year 2025) to give taxpayers more time to transition to the new format. Section G will be effective for tax year 2025 (processing year 2026), subject to the guidelines noted above.
The final Form 6765 instructions will be released at a later date, according to the IRS.