Revised Form 6765 significantly expands reporting requirements

In brief

What happened?

A final version of Form 6765, Credit for Increasing Research Activities, and Instructions is now available for taxpayers to claim the Section 41 research credit on their 2024 federal income tax returns. The revised form, which requires taxpayers to submit significantly more information about their research activities and business components than prior versions, represents the most significant revision since replacement of the Alternative Incremental Credit with the Alternative Simplified Credit in 2009.   

Final Form 6765, dated December 2024, reflects changes based on comments received from various external stakeholders with respect to previous draft versions of the form released in 2024 and 2023. The IRS has indicated that the revisions to the form are intended to (1) make tax reporting more consistent, (2) improve the information received for tax administration, and (3) build an ongoing effort to manage resources in a more effective and efficient way.  

Why is it relevant?

Taxpayers have been waiting for the updated Form 6765 and instructions since the IRS announced new criteria for valid Section 41 research credit refund claims in October 2021, which generally require taxpayers to provide detailed information and break out research activities by business component. The significant increase in information required to be disclosed may mean that taxpayers need to involve other parts of the organization, including the legal and technology departments.  

The final version of Form 6765 generally is applicable for 2024 tax years, except for Section G – Business Component Information, which calls for detailed information about the research activities and expenses underlying each business component that is included in the credit claim. Completion of Section G is optional for all filers for 2024 tax years to allow taxpayers time to transition to the new format. Section G will be effective beginning in 2025. 

Action to consider

For the 2024 Form 6765, taxpayers should determine which information regarding research activities they will be required to provide to complete and whether to complete Section G. Taxpayers also should consider involvement of individuals outside the tax department and how to handle disclosure of potentially sensitive information to the IRS.