R&D tax credit reporting updates
The IRS continues to refine the redesigned Form 6765, Credit for Increasing Research Activities. After finalizing the form earlier this year, the Service has extended the public comment period on related instructions through March 31, 2026. Section G—intended to capture detailed business component information—remains optional for 2025 filings, though the IRS has signaled it is expected to become mandatory beginning in tax year 2026 (processing year 2027). Revised instructions are expected in January 2026.
Separately, the Service extended the transition period for refund claims. Through Jan. 10, 2027, the IRS will issue a letter indicating information is missing that is required to process the research credit refund claim and provide taxpayers 45 days to perfect the filing.
Washington National Tax observations
The Oct. 1 release continues the IRS activities over the past several years aimed at promoting consistency in research credit reporting, enhancing risk assessment, and reducing improper claims. Beginning with the 2021 Chief Counsel Memorandum (20214101F) requiring taxpayers to attach a statement that identifies business components, activities, and expenses with research credit claims on amended returns, the IRS has steadily increased its expectations for information.
The 2023 draft redesign of Form 6765 introduced expanded reporting sections, culminating in a finalized version in early 2025. Section G, Business Component Information, originally expected to become mandatory for 2025, will now remain optional for another year.
The deferral of section G reporting, along with the extended transition period for perfecting amended refund claims, reflects the IRS’s attempt to balance its desire for more detailed information with taxpayers’ need for additional time to update their recordkeeping processes. The information requested—particularly at the business component and activity level—represents a significant increase in the detail that has historically been required on a tax return. While section G is not mandatory for 2025, the IRS has made clear that it values this information and will seek it in examinations.
Although the requirement has been deferred, taxpayers should not delay in enhancing recordkeeping at the business-component level. The IRS continues to emphasize the need for robust substantiation, and detailed, audit-ready deliverables will remain critical in examinations. Preparing now will position taxpayers for eventual mandatory section G reporting and other potential future information requirements.
