Background
As part of the IRS’s ongoing efforts to impose stricter documentation requirements on taxpayers who claim the research tax credit, they released proposed changes to the Form 6765 on September 15, 2023, that would take effect beginning with the 2024 tax year. The changes to the form were to provide taxpayers with a consistent and predefined format and to improve the information received for tax administration.
The initial draft included the addition of two new sections of information reporting seeking detailed information about business components for both quantitative and qualitative reporting, reordering some of the existing fields on the form and adding new questions seeking various other information related to the amount of officers’ wages included in wages for qualified services and information related to the acquisition or disposition of any major portions of the trade or business during the year.
New Proposed Changes to Form 6765 (IR-2024-171)
The new draft form released on June 21, 2024, removes several requirements from the previous version and introduces new thresholds to relieve small businesses from extensive reporting. These revisions were in response to feedback received from external stakeholders that revealed the reporting of information as detailed in the previous draft would be overly burdensome for the taxpayer.
The proposed changes to Form 6765 reflect the IRS's responsiveness to taxpayer concerns by streamlining the reporting requirements, particularly for small businesses. These adjustments aim to reduce the compliance burden while still ensuring accurate and efficient tax administration. If you have questions or need further clarification on how these changes might impact your business, please don't hesitate to contact us for more information.
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