R&D Tax Credit Filers: IRS Releases Streamlined Form 6765

The IRS listened to taxpayer feedback on the initial proposed form and made significant changes to reduce the burden of claiming the research credit. Here are the key improvements:

• Simplified Section G: Section G, which details business components, is now optional for certain filers.
  
  • This includes “qualified small businesses” claiming the reduced payroll tax credit.
  • Taxpayers with total qualified research expenditures (QREs) equal to or less than $1.5 million, determined at the control group level, and equal to or less than $50 million of gross receipts, as determined under section 448(c)(3) (without regard to subparagraph (A) thereof), claiming a research credit on an original filed return.
  • There are special instructions for taxpayers using the ASC 730 directive who can report ASC 730 QREs as a single line item on Section G.
• Reduced Reporting Requirements: Even for those still required to fill out Section G, the number of reported business components has been brought down. Companies will now report 80% of their total qualified research expenditures (QREs) in descending order of amount, with a maximum of 50 business components.
  
  • The IRS simplified reporting for individual business components in Section G. Businesses don’t have to specify if a component is new or improved, how it’s used (sale, license, lease), or provide a detailed explanation of the information they were trying to find.
• Clearer Instructions: The IRS promises additional clarification in the final instructions for terms like “officers,” “controlled group reporting,” and business component names.