2024 Changes to Federal Form 6765
On June 21, 2024, the IRS released a revised draft of Federal Form 6765 for the R&D Tax Credit that will apply to tax years 2024 and forward. The new draft form includes modifications to Form 6765, released in September 2023. These revisions ease some of the business component reporting requirements that were part of the original draft version of the 2024 form. The announcement of these changes comes just three days after the IRS released updated guidance waiving certain business component reporting requirements for taxpayers claiming a refund for the R&D Credit on an amended tax return.
Section G of the new draft Form 6765 requests business component details that will be optional for:
- Qualified small businesses electing the payroll offset under IRC 41(h)(1) & (2), and
- Taxpayers with total annual qualified research expenses (QREs) of $1.5M or less and $50M or less in annual revenue.
The business component information that is optional to report includes:
- Whether the business component is new or improved,
- If the business component is for sale, license, or lease, and
- The narrative describing what information is sought to be discovered.
The 6765 instructions (Rev. January 2025) released in December 2024 further clarify that the narrative describing what information is sought to be discovered only applies to amended returns. Taxpayers filing on an original timely filed return do not need to provide this information on Section G. The IRS also reduced the number of business components that must be reported in Section G. Business components comprising 80% of the total QREs must be reported in descending order by QREs for each business component, but no more than 50 business components need to be reported.
For the 2024 tax year, these reporting requirements are optional for all U.S. taxpayers. Moving forward into 2025, the business component detail is optional for small businesses but is required for businesses that do not meet the definition of a small business. Please note that 2024 tax returns that are amended for purposes of claiming the R&D Credit must include all information in Section G, even if the taxpayer meets the definition of a small business.
These changes allow all U.S. taxpayers time to adjust their R&D Credit substantiation methods for the 2024 tax year before all Section G information is required in 2025. More importantly, the new form lessens the record-keeping requirement for small businesses claiming the R&D Credit.
If you have any questions about credit qualifications or McGuire Sponsel’s approach to claims, please do not hesitate to contact our R&D Tax Services team.
David Seibel is a Shareholder for the R&D Tax Credit Practice. He combines his knowledge of tax law with his engineering expertise to maximize companies’ research credits and reduce their overall tax burdens.
David ensures clients are receiving studies that meet the highest level of quality. He conducts fieldwork, produces detailed technical calculations, and builds narratives that accurately reflect each company’s research and experimentation activity.
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