Form 6765 is Getting a Makeover!

Hey there, fellow taxpayers! Big changes are coming down the pipeline from the IRS that could shake up how you handle your tax filings, specifically when it comes to Form 6765 and the Research and Development (R&D) tax credits. Buckle up because starting in 2024, there are some tweaks headed our way that might just switch up our tax game.

So, what’s the deal with these changes? Let’s break it down without the jargon.

First off, Form 6765 is getting a bit of a makeover. They’re adding some new questions before Section A. One of them is all about whether your organization belongs to a controlled group or has common control. Then, we’re diving into Section E, where things get a bit more detailed. We’re talking about Business Components (BCs), officer compensation, acquisitions and dispositions, and even some questions about Qualified Research Expenditures (QREs).

But wait, there’s more! Section F is making its debut too. It’s like the IRS took inspiration from the CCA memo and cranked up the detail. Now, they want to know if a BC is new or improved, what type it is (product, process, you name it), and how it’s being used in your business. And for those of us dealing with software, get ready to differentiate between various types like Internal Use Software (IUS) and Dual Function Software (DFS).

These changes are no joke. They’re aligning with tweaks made back in 2022, and they’re about to catch many off guard, especially when it comes to categorizing costs by business component. And get this, you’ll need all this data sorted when you file.

This is where having your ducks in a row becomes crucial. Providers handling your R&D need to step up their game in documenting everything, especially since a lot of reports currently miss out on business component details and discussions on the 4-part test.

At Morris and Associates, we’ve been diving deep into data and documentation, making sure we’re on top of these changes. It’s all about having the right folks in your corner to make this transition smooth. Keep your eyes peeled for updates and consider teaming up with seasoned experts in the field to navigate these shifts like a pro.