Tax alert

IRS releases draft instructions to claim amended R&D credits

IRS formalizes additional requirements to claim the credit on an amended return

Jan 18, 2023
Credits & incentives R&D tax credit Business tax

 Revised instructions for amended research and development (R&D) credits

IRS issues draft Form 6765 instructions regarding the 5 items of information required to be included with research credit claims filed on an amended return or an administrative adjustment request (AAR).

The IRS released a draft of the instructions for Form 6765, credit for increasing research activities. As expected, the IRS formalized the rules they outlined in FAA20214101F.  The FAA “clarified” how taxpayers can make a valid claim under section 41 (research credit) on an amended return or administrative adjustment request (AAR).

The instructions now require 5 specific items for any taxpayer either filing an amended return to claim increasing research activities that either were not reported on an originally filed return or to increase the amount reported on an original return.  The five items required for these claims include:

  1. The factual basis of your section 41 research credit claim.
  2. The research activities performed.
  3. The individuals who performed each research activity. A taxpayer may instead identify the individuals who performed each research activity by listing the individual's title or position.
  4. The information each individual sought to discover.
  5. The total qualified employee wage expenses, total qualified supply expenses and total qualified contract expenses paid or incurred for section 41 research credit claim or complete the Form 6765.

Any submission must identify the exact pages that contain the five items of information described above. The instructions also state that Bipartisan Budget Act Partnerships cannot file amended returns but must instead file an Administrative Adjustment Request.

The instructions do not come as a surprise as the IRS has been indicating that they intended to move forward.

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