Refund claim update – R&D Refund Claim Transition Period Extended to January 10, 2026
Reading Time: 2 minutes
Background
Amended returns claiming a refund for R&D tax credits filed after January 10, 2022, have a new process to follow. Specifically, the IRS mandated 5 pieces of information that were required to be submitted along with the amended return.
These included:
- List the business components for which a claim is being made.
- Describe the research activities for each business component.
- Name the individuals and/or job titles who performed each research activity.
- Describe the information that each person/job category sought to discover.
- Provide total qualified expenses for research expenditures claimed on Form 6765.
During the first year of the new requirements, taxpayers were allowed to correct deficient refund claims. If a refund claim was deemed deficient, the IRS would notify the taxpayer in writing, along with which piece of essential information is missing or otherwise incorrect. From there, the taxpayer had 45 days (from the date of the letter) to correct the issue. If additional information needed was not submitted within the 45-day window, the claim would be rejected.
What’s New
The original transition period allowing time to perfect the return was January 10, 2023. The IRS first extended the time to perfect refund claims for R&D on amended returns in October 2023. Since then, as of November 25, 2024, the IRS extended the transition period allowing taxpayers 45 days to perfect a claim through January 26, 2026. After January 10, 2026, deficient refund claims will simply be denied without an opportunity to appeal. The process is the same as before, but the good news is that taxpayers have additional opportunities to perfect R&D refund claims filed on amended returns.
We imagine this extension is partly because the IRS has changed the items that must be submitted for returns postmarked by June 18, 2024, and beyond. Specifically, the following requirements have been eliminated:
- The names or job categories of the individuals who performed each research activity and
- The information each person or job category sought to discover.
While these requirements have been eliminated from initial reporting for a refund claim, it is essential to note that the IRS may still request this information in the event of an exam. Taxpayers are still required to list all business components (or projects), and then taxpayers should describe the research activities performed for each business component. The four-part test doesn’t need to be described in detail, and simply restating the four-part test’s language wouldn’t be enough anyway. Thus, a formal report is unnecessary, but if you choose to use one, you must specify which page(s) the above essential information is on for the remaining 3 requirements.
Contact Us
The recently extended transition period for perfecting an R&D claim for another year is welcome news for many businesses. The opportunity to submit additional information and documentation before a final IRS ruling is quite helpful. If you have questions about the information outlined above or need assistance with claiming the R&D credit, JLK Rosenberger can help. For additional information, call 949-860-9902 or click here to contact us. We look forward to speaking with you soon.