IRS Extends R&D Credit Claim Transition Period
The IRS recently announced it is extending for another year the transition period during which taxpayers are provided 45 days to perfect a research and development (R&D) credit claim for refund prior to the IRS’ final determination on the claim.
Last year, the IRS Office of Chief Counsel issued new documentation requirements for supporting claims for tax refunds for R&D tax credits in an effort to deter companies from submitting claims for tax breaks for R&D work that was never conducted. After tax professionals and clients requested clarification on the new requirements, in January of this year, the IRS issued new guidance and extended the deadline for "perfecting" claims, expanding the transition period from 30 to 45 days.
For claims that include an R&D credit claim filed during the transition period from Jan. 10, 2022, through Jan. 9, 2023, taxpayers were given 45 days to perfect a claim filed on a timely basis that does not provide the five essential pieces of information:
- Identifying all the business components that form the factual basis of the research credit claim for the claim year
- All the research activities performed by each business component
- All individuals who performed each research activity by business component
- All the information each individual sought to discover by business component
- The total qualified employee wage expenses, supply expenses and contract research expenses
The transition period has been extended from Jan. 9, 2023, to Jan. 10, 2024.