IRS extends research and development tax credit transition period

The Internal Revenue Service is extending the transition period for revising claims for the research and development tax credit, which gives taxpayers 45 days to “perfect” a research credit claim for refund prior to the IRS’s final determination on the claim, through Jan. 10, 2026.  

In October 2021, in an effort to reduce dubious claims for the R&D credit, the IRS began requiring taxpayers to include more information with their claims about all the business components and research activities they’ve performed, the individuals who performed each research activity, the information each individual sought to discover, the total qualified employee wage expenses, total qualified supply expenses and total qualified contract research expenses for the claim year.  

This past June, amid complaints about the more stringent rules, the IRS made modifications to waive some requirements. For claims postmarked after June 18, 2024, the reduced set of requirements now apply, requiring taxpayers to:

• Identify all the business components to which the Section 41 research credit claim relates for that year;
• Identify all research activities performed for each business component; and,
• Provide the total qualified employee wage expenses, total qualified supply expenses and total qualified contract research expenses for the claim year. This can be done using Form 6765, Credit for Increasing Research Activities.

The transition period for perfecting the claims has now been extended through Jan. 10, 2026. The IRS has twice before extended the amount of time it has given taxpayers to perfect an R&D tax credit claim to meet the proper documentation requirements. Last fall, taxpayers were given until Jan. 10, 2025 to perfect their claims.

For more information, visit this page on IRS.gov.