TAX ALERT: IRS may extend the transition period for compliance regarding research credit refund claims


IRS Update *** The IRS is extending for another year (through January 10, 2024) the transition period during which taxpayers are provided 45 days to perfect a research credit claim for refund prior to IRS’s final determination on the claim.

A recent comment by an IRS official indicating that the agency may extend the transition period for compliance regarding research credit refund claims serves as a timely reminder for businesses to stay on top of their R&D tax credits – and how Engineered Tax Services (ETS) can help.
Here’s the latest:

  • An October 2021 IRS announcement provided that refund claims for section 41 research credits must include detailed information in five specific areas, with claims failing to meet these requirements deemed invalid. The IRS provided a one-year transition period during which examiners could correspond with taxpayers on the required information and give them 45 days to cure deficiencies. The agency is now considering extending this transition period.
  • The IRS is also considering changes to Form 6765 to improve the efficiency of research credit exams, with updated guidance expected to define the scope of the disclosures required and provide some standardization.

Good News for Small Businesses

If implemented, both of these developments signal good news for small businesses seeking to take advantage of potential R&D tax credits to realize tax savings, increase cash flow and stay competitive in the marketplace – provided they know where to look and what to look out for.

The experts at ETS can help you keep up with the these and other regulatory changes to ensure your claim has the maximum chance of acceptance by the IRS and other tax bodies.

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