Sep 15, 2023 IRS Requests Feedback on Preview of Proposed Changes to Form 6756, Credit for Increasing Research Activities

An Internal Revenue Service news release previews proposed changes to certain sections of Form 6765, Credit for Increasing Research Activities, commonly known as the Research & Development (R&D) tax credit.

The IRS is soliciting feedback in the absence of the formal draft release process for form changes. The changes are in line with proposed changes that were previously announced in 2022. The proposed changes would include the following:

  • A new Section E with five questions seeking miscellaneous information.
  • A new Section F for reporting quantitative and qualitive information for each business component, required under Section 41 of the Internal Revenue Code.
  • Moving the “reduced Credit” election question and the “controlled groups or business under common control” question from line 17 and line 34 to top of Form 6765.

ICS Observation: Information requested in Section F is already required for amended returns. The IRS will not consider removing this requirement for an amended claim. Requiring taxpayers to include this burdensome type of reporting on a timely filed claim is essentially making the R&D tax credits a Tier 1, high risk issue again.

ICS has always conducted its studies under the assumption that a client will be audited. Our trained tax professionals not only conduct on site interviews to collect detailed information needed to file and document a study, but also assist our clients with training and implementing policies to assist in collecting R&D data so future studies will not be as burdensome.

The IRS is requesting feedback on whether Section F should be optional for certain taxpayers, including those:

  • With qualified research expenditures less than a certain dollar amount at a controlled group level,
  • With a Research Credit less than a certain dollar amount at a controlled group level, or
  • That are a Qualified Small Business for the Payroll Tax Credit.

Feedback will need to include the justification; limitation amounts and any pros/cons as for and against the new provisions.

All feedback on proposed changes should be submitted to lbi.rt.team@irs.gov with subject line: “Feedback\Questions F6765” by October 31, 2023′.

The R&D Tax Credit is a federal benefit given to companies that develop, design, or improve products, processes, formulas, or software. Many processes and activities qualify for the research credit. The R&D tax credit can be claimed by any company for both current and prior tax years. Are you eligible? » Contact our R&D experts