IRS Extends Feedback Period on Form 6765: What Businesses Need to Know About the R&D Credit

At Velin & Associates, Inc., we closely monitor tax law changes so our clients — from YouTubers and Shopify store owners to medical practices, dental firms, law offices, and high-net-worth individuals — stay ahead of the curve.

One of the latest developments involves the IRS extending deadlines and updating requirements for Form 6765, Credit for Increasing Research Activities (commonly called the research credit or R&D tax credit). This credit is one of the most powerful tax-saving tools for businesses that invest in innovation, new processes, or product development. In simple terms, it lets you get money back from the IRS for the time and money you spend improving your business. For example, if you pay employees or contractors to test new software, design better packaging, create new workflows, or develop a new product, a portion of those costs can be turned into a dollar-for-dollar tax credit — which directly lowers the amount of tax you owe.

With new rules coming into effect, here’s what you need to know.

Extended Feedback Period for Form 6765

The IRS has given businesses and stakeholders until March 31, 2026 to weigh in on the draft instructions for Form 6765. This extension reflects the IRS’s recognition that taxpayers need more time to understand and comply with evolving rules.

In addition:

• Section G (Business Component Information) will remain optional for tax year 2025 (filed in 2026).
• Starting with tax year 2026 (filed in 2027), Section G will become mandatory, except for:
  • Qualified Small Businesses (QSBs) claiming reduced payroll tax credits, and
  • Businesses with ≤ $1.5M in qualified research expenses (QREs) and ≤ $50M in gross receipts.

This phased approach gives businesses some breathing room to adjust before the reporting rules become stricter.

What’s New on Form 6765

The IRS has introduced several structural changes to Form 6765 that all taxpayers should be aware of:

1. Section 280C Election – Now moved to the top of the form (Item A). Taxpayers must check “Yes” or “No” to elect the reduced credit on a timely filed original return (including extensions).
2. Controlled Group / Common Control Reporting – Item B now asks if you are part of a controlled group or under common control. If “Yes,” you must attach additional documentation.
3. New Section E – Other Information – If you report Qualified Research Expenses (QREs) on line 48, you must complete this section.
4. ASC 730 Directive – Eligible taxpayers who choose this directive must check “Yes” on line 41.
5. New Section F – QRE Summary – Requires taxpayers to summarize total qualified research expenses and indicates whether Section G must be completed.
6. New Section G – Business Component Information – Optional for 2025 but required from 2026 onward (with limited exceptions).

These updates emphasize transparency and detailed documentation — signaling that the IRS intends to scrutinize R&D credits more closely while also providing clearer guidance for compliance.

IRS Reminders That Could Affect Your Filing

Alongside the new changes, the IRS issued several important reminders:

• Payroll Tax Credit Cap – Small businesses can apply a maximum of $500,000 of their research credit against payroll tax liabilities.
• Amended Returns – Refund claims that include the R&D credit must provide detailed information (business components, research activities, and expenses) to be valid.
• BBA Partnerships – Partnerships under the Bipartisan Budget Act (BBA) must pay attention to adjustments to credits.

Extension of the Research Credit Claim Transition Period

The IRS has extended the research credit claim transition period through January 10, 2027. During this time, taxpayers will have 45 days to perfect a research credit claim for refund before the IRS makes a final determination.

To be valid, claims must:

• Identify all business components related to the Section 41 research credit,
• Identify the research activities performed for each component, and
• Provide total qualified employee wages, supply expenses, and contract research expenses.

This extension provides flexibility — but also a clear warning that the IRS expects precise documentation going forward.

Why This Matters for Your Business

The R&D credit isn’t limited to tech companies or laboratories. Many industries can qualify, including:

• YouTubers, TikTokers, and Filmmakers – experimenting with editing tools, production techniques, or automation software.
• Shopify Store Owners or Amazon Businesses – developing new packaging, automation systems, or custom integrations.
• Dentists and Medical Practices – testing innovative patient care technology or digital workflows.
• Law Firms – adopting advanced legal research software or case management systems.
• High Net Worth Individuals – investing in startups or ventures developing new technologies.

By keeping accurate records and understanding these IRS changes, you can maximize credits that directly reduce your tax liability.

Next Steps for Businesses

1. Track R&D expenses carefully — including wages, contractor costs, and supplies used in eligible projects.
2. Use 2025 as a transition year — while Section G is optional, best practice is to prepare as if it were required.
3. Work with an experienced CPA — at Velin & Associates, Inc., we understand both the tax credit rules and the unique needs of industries like e-commerce, healthcare, law, and creative businesses.
4. Plan ahead for 2027 — perfection standards and mandatory reporting will tighten; weak documentation could cost you valuable credits.

How Velin & Associates, Inc. Can Help

Navigating IRS regulations — especially highly technical ones like Form 6765 — is complex. At Velin & Associates, Inc., our team of experienced CPAs helps businesses and individuals identify qualifying expenses, properly document activities, and file claims that meet the IRS’s strict standards.

We specialize in guiding clients across industries, including:

• CPA for YouTubers & Creators
• Shopify Store CPA & CPA for Online Commerce
• CPA for Filmmakers & Amazon Business CPA
• Dentist CPA & Dental Business CPA
• CPA for Doctors & Medical Practices
• CPA for Law Firms & Attorneys
• CPA for High Net Worth Individuals

Whether you’re innovating in content creation, e-commerce, healthcare, or professional services, we can help you leverage the R&D credit while staying fully compliant.

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org