IRS Provides Taxpayers with Additional Time to Perfect R&D Refund Claims

On September 30, 2022, the IRS announced that it has extended the transition period through January 10, 2024, after which time taxpayers will have 45 days to perfect their R&D tax credit refund claim if any information is deemed missing or insufficient by the IRS.

In an IRS Chief Counsel Memo released on 10/15/2021, the IRS notified taxpayers of additional detailed information that will be required when claiming valid research credit refunds. Under the new guidelines, for a research credit refund claim to be deemed valid, the taxpayer must:

• Identify all the business components to which the research credit claim relates for that year.
• For each business component: (1) identify all research activities performed; (2) identify all individuals who performed each research activity; and (3) identify all the information each individual sought to discover.
• Provide the total qualified employee wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year.

These new requirements have been under a lot of scrutiny. However, the additional transition period is a welcome update that will provide taxpayers with more time to implement procedures to capture this more detailed information.

Anchin has published an article on the recent changes in the Thomson Reuters Corporate Taxation, May – June 2022 Issue:
https://www.anchin.com/whitepapers/research-credit-refund-claims-new-irs-requirements/

To discuss these and other matters of importance related to the R&D tax credit, contact Yair Holtzman, Tax Partner and Leader of Anchin’s R&D Tax Credits Practice Group at 914-860-5599 or [email protected] or your Anchin Relationship Partner.