IRS Issues Information on Valid Research Credit Claims

The IRS issued information that taxpayers will be required to include for a research credit claim for refund to be considered valid. The current Treasury regulations require a refund claim to forth sufficient facts to apprise IRS of the basis of the claim. Chief Counsel Memorandum 20214101F will be used to improve tax administration with clearer instructions for eligible taxpayers to claim the credit while reducing the number of disputes over such claims. Taxpayers would be needed to identify all the business components to which the Code Sec. 41 research credit claim relates for that year.

For each business component:

• all research activities performed must be identified;
• all individuals who performed research activities must be identified; and
• all the information the individual sought to discover must be identified.

Finally, taxpayers would need to provide the total qualified employee wage, supply and contract research expenses for the claim year. This could be done using Form 6765, Credit for Increasing Research Activities.