On November 25, 2024, the IRS extended the transition period for documentation requirements it has imposed on taxpayers claiming refunds for additional research and development (R&D) credits. In 2021, the IRS announced its position that a valid R&D credit refund claim must, in addition to identifying qualified research expenses, include information on all business components, research activities and the employees that performed them, and the information that each individual sought to discover. The IRS initially allowed taxpayers a one-year transition period (through January 10, 2023) during which the IRS will notify a taxpayer if it concludes that a claim is deficient and allow the taxpayer 45 days to perfect its claim before it is rejected. For the third time, the IRS has now extended the transition period during which the IRS will notify a taxpayer that its R&D refund claim is deficient and provide 45 days to perfect that claim. The transition period now extends through January 10, 2026.

These latest updates come as the IRS has proposed changes to the Form 6765, Credit for Increasing Research Activities, and the instructions to Form 6765 that, among other things, would require taxpayers to provide the five items of information. We expect instructions to Form 6765 to come out soon, possibly before the end of the year.

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