Onerous R&D Tax Reporting Requirements Delayed

On Oct. 1, the IRS issued news release 2025-99 announcing several changes regarding Form 6765 and research credit claims, including an extension of the implementation timeline for Section G reporting requirements on Form 6765. Taxpayers now will be required to complete Section G beginning with the 2026 tax year, rather than the 2025 tax year as previously announced. The IRS also stated that revised Form 6765 instructions for the 2025 tax year will be released in January 2026 and the comment period for providing feedback related to Form 6765 is extended through March 31, 2026.

In addition, the IRS announced that it will continue to allow 45 days for taxpayers to perfect a research credit refund claim through Jan. 10, 2027.

Background

On Sept. 15, 2023, the IRS released a preview of proposed changes to Form 6765. The changes previewed required significantly more quantitative and qualitative information than historically required upon filing. The IRS indicated that the goal of the proposed changes was to provide effective tax administration and allow for more efficient risk assessment of research credit claims.

In June 2024, a revised draft Form 6765 was released that incorporated stakeholder feedback. On Dec. 12, 2024, the IRS released an updated draft Form 6765 with minor grammatical modifications to the draft form released in June 2024. The draft was followed by updated instructions for Form 6765 on Dec. 20, 2024, with the IRS requesting feedback through June 30, 2025.

Form 6765, Section G

With its Oct. 1 news release, the IRS has extended the time available for applicable taxpayers to comply with the new Section G business component reporting requirements. The extension reflects ongoing uncertainties related to several areas, including controlled group reporting requirements; disclosure of business component detail for taxpayers that use statistical sampling or the IRS’ Large Business and International (LB&I) division Accounting Standards Codification (ASC) 730, “Research and Development,” directive; what the reference on the form to a new category of qualified research expense means; and other reporting requirements.

The extension for complying with the increased requirements means that beginning with the 2026 tax year, Section G is mandated for all taxpayers, with optional reporting for:

• Qualified small-business taxpayers that elect to claim a reduced payroll tax credit under Section 41(h)
• Taxpayers that claim a research credit on an originally filed return with total qualified research expenses (QREs) equal to or less than $1.5 million, determined at the controlled-group level, and equal to or less than $50 million of gross receipts, as determined under Section 448(c)(3)

Section G requirements include reporting:

• The business components making up the top 80% of QREs, or the top 50 business components
• The total amount of qualified wages separated into three distinct categories: direct performance, direct supervision, and direct support of qualified research activities
• Additional details on attachments and significant support related to claims that include statistical sampling or on amended returns at the time of filing

The IRS also clarified that line 49(f), which states, “Describe the information sought to be discovered,” is required only if the Form 6765 is filed with an amended return

For 2025 tax returns, taxpayers can, but are not required to, complete Section G.

Crowe observation

The IRS’ announcement to extend both the comment period and the tax year requirement to complete Section G is a welcome development and provides additional time to prepare for the increased reporting requirements. Taxpayers can use the additional time to provide feedback to the IRS and to proactively evaluate their processes in anticipation of the mandatory requirements scheduled to begin with the 2026 tax year.

R&D refund claims

On Oct. 15, 2021, the IRS released Field Attorney Advice 20214101F, which outlined procedures and information that area counsel within the IRS Office of Chief Counsel believe are required for taxpayers to submit a valid claim for refund of the research credit made on an amended return. On June 18, 2024, the IRS updated the information it believes is required for a valid research credit refund claim. According to the update, the IRS provides taxpayers with 45 days to provide additional information to perfect a refund claim. The news release announces that allowance of the 45-day period will continue through Jan. 10, 2027.

Looking ahead

The extension announced in the news release allows taxpayers the opportunity to provide feedback and request additional clarification on several aspects of Form 6765. For the 2025 tax year, taxpayers should continue to evaluate processes that will allow for efficiently identifying and gathering information necessary to meet the reporting requirements for the 2026 tax year. Taxpayers should consult their tax advisers to understand how changes to Form 6765 could affect their research credit claim approach and timing to complete the required information.