IRS Relaxes Documentation Requirements for Claiming R&D Tax Credits on Amended Returns

Since January 10, 2022, the IRS has required that taxpayers provide supplementary information beyond the usual requirements of the Form 6765 to claim the R&D Tax Credit on an amended tax return.

Initially mandated by Chief Counsel Memorandum 20214101F, this directive included five specific items related to the amended year:

1. Identification of all business components related to the Section 41 research credit claim
2. For each business component:
   • Identification of all research activities performed
   • Identification of all individuals who performed each research activity
   • Identification of all the information each individual sought to discover
3. Totals for qualified employee wage expenses, qualified supply expenses and qualified contract research expenses

On June 18, 2024, the IRS updated its guidelines, eliminating the need for the names of the individuals who performed each research activity and the information each individual sought to discover with respect to each business component. Taxpayers are still obligated, however, to identify each business component, outline the research activities conducted and report total expenses for the claim year. This update applies to research credit refund claims postmarked on or after June 18, 2024.

The IRS clarified that despite the relaxed guidelines, the names of the individuals who conducted the research activities and the information they sought to discover may still be requested if a tax return claiming the research credit is selected for audit.

Thorough documentation remains essential for taxpayers to claim the R&D Tax Credit for both original and amended tax returns. Collaborating with your tax team will ensure your amended claims are submitted with a substantiation package that meet current IRS requirements.

For inquiries regarding eligibility for the R&D Tax Credit or Schneider Downs’ approach to R&D claims, please contact us. We will continue to monitor developments concerning Sections 41 and 174 and provide regular updates.

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