IRS Simplifies Requirements for Supporting Research Credit Refund Claims

To ease the burden on taxpayers filing Research & Development tax credit refund claims, the IRS is waiving two key requirements. Effective June 18, 2024, taxpayers will no longer need to submit the following information to the IRS at the time the refund claim is filed:

1. The names of the individuals who performed each research activity; and
2. The information each individual sought to discover.

However, the IRS states that taxpayers may still be asked to provide the previously required documentation if their refund claim is selected for IRS examination.

The IRS initially notified taxpayers of additional detailed information required when making valid research credit refund claims in an IRS Chief Counsel memorandum released on October 15, 2021. That list included five documentation requirements that proved quite burdensome for taxpayers.

The requirements remaining in force for taxpayers are as follows and must be submitted at the time the refund claim is filed:

1. Identify all the business components to which the research credit claim relates for that year;
2. For each business component, identify all research activities performed; and
3. Provide the total qualified wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year by using Form 6765, Credit for Increasing Research Activities.

Taxpayers should note that the IRS previously extended the 45-day transition period for perfecting deemed deficient research credit refund claims through January 10, 2025. Perfecting the claim allows taxpayers an opportunity to provide missing information required to process the research credit refund claim. Following the transition period, refund claims missing the three current requirements detailed above will be rejected.

If you have any questions about the revised documentation requirements or need assistance with filing your R&D tax credit refund claims, please contact Yair Holtzman, Partner and Leader of Anchin’s Research & Development Tax Credits group, or your Anchin Relationship Partner.