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IRS Previews Proposed Changes to Research Credit

S.J. Steinhardt
Published Date:
Sep 18, 2023

The IRS previewed proposed changes to certain sections of Form 6765, Credit for Increasing Research Activities, also known as the Research Credit.

The IRS said that it is providing a preview in order to solicit feedback from stakeholders in advance of the formal draft release process for form changes. Some of the proposed changes address previous feedback received from taxpayers and tax professionals.

Some tax professionals complained in 2021 after the IRS released a memorandum from the IRS's Office of Chief Counsel requesting more detailed information about the business components on which the research credit is claimed when applying for tax refunds, Accounting Today reported. Companies were required to supply far more information than they were accustomed to offering in the past, as the IRS sought to make sure the claims were legitimate.

The new tax form comes as more companies are also adapting to how to account for research-and-development expenses under the terms of the Tax Cuts and Jobs Act (TCJA) of 2017, requiring companies to start amortizing R&D expenses. Last week, the IRS released a notice providing interim guidance on the capitalization and amortization of specified research and experimental expenditures.

The proposed changes, which the IRS would like to make effective beginning with tax year 2024, include the following:

▪ A new Section E with five questions seeking miscellaneous information;

▪ A new Section F for reporting quantitative and qualitative information for each business component, required under Section 41 of the Internal Revenue Code;

▪ Moving the "reduced credit" election question and the "controlled groups or businesses under common control" question from line 17 and line 34 to the top of Form 6765;

The IRS is also requesting feedback on whether Section F should be optional for certain taxpayers, including those:

▪ With qualified research expenditures less than a certain dollar amount at a controlled group level;

▪ With a Research Credit less than a certain dollar amount at a controlled group level; or

▪ That are a Qualified Small Business for the Payroll Tax Credit.

Feedback for each suggestion should address the justification, limitation amounts and pros/cons.

Feedback should be emailed to with the subject line: "Feedback/Questions F6765" by Oct. 31. The IRS said it would consider all the feedback it receives by then before it finalizes any changes to the form.

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