Requirements for Research Credit Claims

On October 15, 2021, the IRS Chief Counsel Office released a memorandum establishing new requirements to claim research credits on an amended tax return. The effective date of the new requirements is January 10, 2022, so any refund claims attributable to research credits filed on or after this date must be in compliance with the new requirements or risk being denied. In general, refund claims going forward will need to include, at a minimum, the following information:

• Identify all the business components to which the research credit claim relates for the year.
• For each business component, identify all research activities performed, all individuals who performed each research activity, and all the information each individual sought to discover.
• Provide the total qualified costs for employee wages, supply expenses, and contract research expenses for the year. This information is included on Form 6765.

The memo also instructs the taxpayer to provide any and all facts to support the basis of the claim. If a taxpayer provides any additional supporting documentation (such as a credit study) to support their claim, then the taxpayer must identify where in their documentation the facts listed above can be found.

In the event of a rejection of a claim due to not completing the procedural requirements, the taxpayer may be prevented from amending or perfecting its claim if unable to do so within the normal statute of limitations period.