IR-2023-173, Sept. 15, 2023
WASHINGTON — The Internal Revenue Service today released a preview of proposed changes to certain sections of Form 6765, Credit for Increasing Research Activities. The Credit for Increasing Research Activities is also known as the Research Credit.
The IRS is providing a preview to solicit feedback from stakeholders in advance of the formal draft release process for form changes. Some of the proposed changes address previous feedback received from taxpayers and tax professionals. The IRS is considering making the changes effective beginning with tax year 2024.
Proposed changes to Form 6765 will provide taxpayers with a consistent and predefined format for tax reporting and improve the information received for tax administration. They will also build on ongoing efforts to manage Research Credit issues and resources in the most effective and efficient manner possible.
The proposed changes include:
- A new Section E with five questions seeking miscellaneous information.
- A new Section F for reporting quantitative and qualitative 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 businesses under common control" question from line 17 and line 34 to the top of Form 6765.
The IRS is also 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 for each suggestion should address the justification, limitation amounts, and pros/cons.
If Section F were optional for certain taxpayers, it would not affect the requirement to maintain books and records and to provide Section F information in similar format, if requested; and it would not apply to amended returns for the Research Credit.
All feedback on the proposed form changes, potential Section F options and questions about these changes should be submitted to Lbi.email@example.com with the subject line: "Feedback/Questions F6765". Feedback is requested by Oct. 31, 2023. All feedback will be considered before finalizing any Form 6765 changes.
These potential changes will help the IRS accomplish some objectives of the IRS Inflation Reduction Act Strategic Operating Plan. For example, helping taxpayers meet their obligations and using enhanced data and analytics to operate more efficiently and select the highest risk cases. Each year, the IRS receives thousands of returns from corporations, businesses and individual taxpayers claiming the Research Credit. Research Credit issues are currently examined in a substantial number of cases and consume significant resources for both taxpayers and the IRS. To provide effective tax administration for this issue, the IRS must ensure taxpayers understand what is required to support claiming the Research Credit.