IRS Releases Revised Draft Form 6765; Also Modifies Refund Claim Disclosures
The new draft also reduces the amount of information required to be disclosed at the business component level, compared to the original draft of the form.
In response to public comments, the Internal Revenue Service released a revised draft of Form 6765 for the Credit for Increasing Research Activities (the "Research Credit") on June 21, 2024. In an effort to reduce taxpayer burden, the new draft makes changes to the draft of Form 6765 that was originally released in September 2023.
Changes in the revised draft of Form 6765 revolve around new Section G - Business Component Information. Section G will now be optional for the following taxpayers:
- Qualified Small Business taxpayers that check the box in Section D of Form 6765 to claim a reduced payroll tax credit, and
- Taxpayers with total qualified research expenditures ("QREs") equal to or less than $1.5 million (determined at the control group level), and $50 million or less in gross receipts during the current tax year.
The new draft also reduces the number of business components required to be reported on Schedule G. Taxpayers will now be required to report 80 percent of total QREs in descending order by the amount of total QREs per business component (with a limit of 50 business components). The new draft also reduces the amount of information required to be disclosed at the business component level, compared to the original draft of the form.
Revised Section G will be optional for all taxpayers for the 2024 tax year. Section G will be required beginning with the 2025 tax year, subject to the exceptions listed above.
In other procedural news, the IRS also announced that it is relaxing a couple of disclosures previously required for any claim for refund related to Research Credit. Specifically, for claims postmarked on or after June 18, 2024, the IRS is waiving the requirement that taxpayers provide the following two items of information with a refund claim:
- The names of the individuals who performed each research activity, and
- The information that each individual sought to discover.
The IRS also notes that, while the disclosure requirement is being waived at the time that a refund claim involving the Research Credit is filed, the information may be requested if the refund claim is selected for examination.
The waived disclosures were initially required following the issuance of Chief Counsel Memorandum 2021-14101F, which was published on September 17, 2021. The IRS states that it is making the change after significant experience with the Research Credit claim for refund process since the release of the memorandum.
Other disclosures required by CCM 2021-14101F will remain in effect.
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Updated on June 28, 2024
