IRS Eases Rules for Research Credit Refunds:

The IRS is easing the rules for claiming a tax refund tied to a claim for the research and development tax credit!

The IRS announced that for claims postmarked as of June 18, 2024, you will no longer be required to provide the following two items of information with their refund claim involving the Research Credit:

🔹 The names of the individuals who performed each research activity, and

🔹The information each individual sought to discover.

The IRS said it's making the change after significant experience with the Research Credit refund claims process. 𝗪𝗵𝗶𝗹𝗲 𝘁𝗵𝗲 𝗜𝗥𝗦 𝗶𝘀 𝘄𝗮𝗶𝘃𝗶𝗻𝗴 𝘁𝗵𝗲 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁 𝗼𝗳 𝗽𝗿𝗼𝘃𝗶𝗱𝗶𝗻𝗴 𝘁𝗵𝗲𝘀𝗲 𝘁𝘄𝗼 𝗶𝘁𝗲𝗺𝘀 𝗼𝗳 𝗶𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝗮𝘁 𝘁𝗵𝗲 𝘁𝗶𝗺𝗲 𝗮 𝗿𝗲𝗳𝘂𝗻𝗱 𝗰𝗹𝗮𝗶𝗺, 𝘁𝗵𝗲 𝗶𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝗺𝗮𝘆 𝘀𝘁𝗶𝗹𝗹 𝗯𝗲 𝗿𝗲𝗾𝘂𝗲𝘀𝘁𝗲𝗱 𝗶𝗳 𝗮 𝗿𝗲𝗳𝘂𝗻𝗱 𝗰𝗹𝗮𝗶𝗺 𝗶𝗻𝘃𝗼𝗹𝘃𝗶𝗻𝗴 𝘁𝗵𝗲 𝗥𝗲𝘀𝗲𝗮𝗿𝗰𝗵 𝗖𝗿𝗲𝗱𝗶𝘁 𝗶𝘀 𝘀𝗲𝗹𝗲𝗰𝘁𝗲𝗱 𝗳𝗼𝗿 𝗲𝘅𝗮𝗺𝗶𝗻𝗮𝘁𝗶𝗼𝗻.

In FAQ 21, it noted that taxpayers are still required to provide the following information at the time the refund claim involving the Research Credit is filed with the IRS:

🔺 Identify all the business components to which the Section 41 research credit claim relates for that year.

🔺 For each business component, identify all research activities performed and

🔺 Provide the total qualified employee wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year.

This may be done using Form 6765, Credit for Increasing Research Activities.

The Chief Counsel memorandum came in response to questions from IRS officials in the Large Business & International division and the Small Business/Self-Employed division about what information taxpayers should provide with their claims for refunds or tax credits, what format they should use, and how the statute of limitations applies. The research credit, also known as the research and experimentation (R&E), or research and development (R&D), tax credit has been used since 1981 by companies and is supposed to incentivize innovation by companies. However, the tax credit has also been exploited by taxpayers who have claimed the R&D credit for doing little in the way of innovation, and it often appears on the IRS's annual list of the "Dirty Dozen" tax scams.