IRS Releases new 6765 Form

IRS Releases new 6765 Form

By
In Federal (U.S National)
  0

The IRS published the final Form 6765 and its instructions for the tax year 2024 on February 10, 2025. This form is used to claim the credit for increasing research activities. The IRS is seeking feedback on the form and instructions until June 30, 2025, to ensure that the instructions for tax year 2025 (processing year 2026) are clear and up to date.

The IRS had previously released a draft version, requesting feedback from external stakeholders and taxpayers. The new draft version has taken this feedback into account, alleviating some of the burden on the taxpayers who need to prepare this form. Their main goal is to provide taxpayers with a consistent and predefined format and improve the information received for tax administration.

The new version includes the following changes:

  • Optional reporting of Section G
  • Reduced scope of Business Component Detail and other revisions

Reporting of Section G

The previous draft version introduced Section F. With the new changes, it is now labeled Section G and provides a space to report on the Business Component Detail.

The instructions will provide that Section G will be optional for:

  • Qualified Small Business (QSB) taxpayers, defined under section 41(h)(1) & (2) who check the box to claim a reduced payroll tax credit; or
  • Taxpayers with total qualified research expenditures (QREs) equal to or less than $1.5 million, determined at the control group level, and equal to or less than $50 million of gross receipts, as determined under section 448(c)(3) (without regard to subparagraph (A) thereof), claiming a research credit on an original filed return.

Reduced scope of Business Component Detail and other revisions

Based on feedback, the IRS reduced the number of business components that must be reported under Section G. Taxpayers should report 80% of total QREs in descending order by the amount of total QREs per business component, but no more than 50 business components (with special instructions for taxpayers using the ASC 730 directive who can report ASC 730 QREs as a single line item on Section G).

In addition to reducing the number of business components, the new draft also reduces the amount of related information.

The previous draft required the taxpayer to specify if a business component is new/improved, a sale/license/lease and the narrative requirement (for original returns) that describes the information sought to be discovered. Each of these requests have since been removed.

The selections for the type of business component are reduced, and the definitions for officers, controlled group reporting and business component descriptive names will be clarified in the instructions.

The IRS published the final Form 6765 and its instructions for the tax year 2024 on February 10, 2025. This form is used to claim the credit for increasing research activities. The IRS is seeking feedback on the form and instructions until June 30, 2025, to ensure that the instructions for tax year 2025 (processing year 2026) are clear and up to date.

Swanson Reed is one of the U.S.’ largest Specialist R&D tax advisory firms. We manage all facets of the R&D tax credit program, from claim preparation and audit compliance to claim disputes.

Swanson Reed regularly hosts free webinars and provides free IRS CE and CPE credits for CPAs. For more information please visit us at www.swansonreed.com/webinars or contact your usual Swanson Reed representative.

Recent Posts