Revised Form 6765: Key Changes and Implications for R&D Tax Credit Claim

“Changes aim to simplify the reporting process and reduce taxpayer burden while providing the IRS with more accurate and consistent information.”

 By Samantha Wenden and Joshua Forsman.

 In late June, the Internal Revenue Service (IRS) unveiled draft revisions to Form 6765, Credit for Increasing Research Activities, commonly known as the Research Credit. These changes aim to simplify the reporting process and reduce taxpayer burden while providing the IRS with more accurate and consistent information.

Key Changes to Form 6765

• Optional Section G: For tax year 2024, Section G, which requires detailed reporting of business components, will be optional for qualified small businesses (QSBs) claiming a reduced payroll tax credit and for taxpayers with total qualified research expenditures (QREs) below certain thresholds.
• Reduced Scope of Business Component Detail: The number of business components that must be reported has been reduced, and the level of detail required for each component has been simplified.
• Clarified Definitions: The IRS has provided clearer definitions for terms like “officers,” “controlled group reporting,” and “business component descriptive names.”

Implications for R&D Tax Credit Claims

These changes have significant implications for businesses claiming R&D tax credits:

• Reduced Burden: The reduced scope of business component detail will lighten the burden on taxpayers, especially smaller businesses.
• Increased Accuracy: The clarified definitions will help ensure that taxpayers are accurately reporting their research activities.

Effective Date

The revised Section G will be optional for all filers for tax year 2024 (processing year 2025). It will become mandatory for tax year 2025 (processing year 2026), subject to the guidelines noted above.

Conclusion

The IRS’s revisions to Form 6765 are a positive step toward making the R&D tax credit more accessible and less burdensome for businesses. By understanding these changes and planning accordingly, businesses can ensure that they are maximizing their R&D tax credit benefits.

Engaging with EPSA USA, which has long-standing expertise in helping firms with credits and incentives, can ensure proper documentation, optimized savings, and streamline the claiming process alongside your CPA firms.

To request a R&D assessment of your firm, please contact Samantha Wenden Senior R&D Consultant, EPSA USA swenden@epsa.com / (830) 708-7711.