New Administrative Authority Governing Valid R&D Tax Credit Claims For Refunds Must Include Five Essential Pieces

Federal Tax Alert: New Administrative Authority Governing Valid R&D Tax Credit Claims For Refunds Must Include Five Essential Pieces of Contemporaneous Documentation

On Monday, January 3rd of 2022 the Internal Revenue Service (hereinafter the “Service”) issued interim administrative authority in connection to R&D Tax Credit claims for refund. As set forth pursuant to this memorandum, effective January 10th of 2022 taxpayers filing a valid R&D Tax Credit claim for refund under I.R.C. § 41 must provide, at a minimum, five essential pieces of contemporaneous documentation including:

  • Identify all the business components that form the factual basis of the R&D tax credit claim for the claim year (i.e., Business Components as statutorily defined under I.R.C. § 41(d)(2)(B) must be identified);
  • All research activities performed by business component (i.e., this must include a description of what the taxpayer did, and how they did it, by business component. It does not need to describe the four-part test under IRC § 41(d)(1) in detail. Language that simply restates the requirements under the Code or Treasury Regulations is insufficient);
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