Item: Revised Draft Form 6765 (IR 2024-171)
Summary: The IRS has issued a revised draft Form 6765, Credit for Increasing Research Activities, in an effort to reduce the burden on taxpayers claiming the research credit. The revised draft still requires substantially more information than the current Form 6765. Taxpayers should begin planning on how current processes may need to be modified to capture the additional information.
Issued: June 21, 2024
Effective: The revised Form 6765 would be effective beginning with tax year 2024; however, Section G will not be required until tax year 2025 to allow taxpayers time to transition.
Detail:
The IRS released its initial proposed changes to Form 6765 on September 15, 2023. Based on comments received from taxpayers, the IRS has made the following changes in an effort to reduce the burden on taxpayers, while still improving the information received for tax administration.
- Optional Reporting of Section G – Business Component Information: Section G will be optional for the following taxpayers:
- Qualified Small Business taxpayers electing to claim a reduced payroll tax credit; or
- Taxpayers, claiming a research credit on an original filed return, with QREs less than or equal to $1.5M at the controlled group level and gross receipts less than or equal to $50M.
- Reduced Scope of Section G – Business Component Information:
- Business component information is limited to the lesser of (1) business components making up 80% of total QREs or (2) the top 50 business components measured by QREs.
- The following questions were also removed: whether a business component is new/improved, a sale/license/lease, and the narrative requirement (for original returns) that describes the information sought to be discovered.
The IRS will provide instructions for the revised Form 6765 at a later date.
BRC is here to help taxpayers as they begin reviewing their current R&D credit process to consider what additional efforts will be needed to meet the increased reporting requirements.
Paige Riordon CPA, Principal, R&D Tax Credit Leader
Paige serves as BRC’s Research Credit Leader out of the Greensboro, NC office. Paige has 20 years of experience assisting clients with Research Credits across a variety of industries, including consumer products, life sciences, manufacturing, pharma, software, and technology. Paige uses her experiences to customize studies to fit each client’s unique needs while ensuring […]
The information contained in this article is for informative purposes only and should not be relied on when making any business, legal, or other decisions. This information may be updated without notice and/or may not contain the most current information that is available related to this topic.