IRS R&D Credit Form Needs Better Fit With Taxpayer Expectations

The IRS’s recent acknowledgment that it’s evaluating the form requirements for the research and development tax credit is promising. Whether that leads to meaningful improvement will depend on the IRS’s willingness to engage with taxpayers and work collaboratively toward a more practical reporting framework.

In October 2025, the IRS announced it was “continuing to seek feedback” on instructions to Form 6765, Credit for Increasing Research Activities, confirming that a new section would remain optional for tax year 2025 and postponing its mandatory completion until tax year 2026.

IRS senior adviser David Hudson, speaking at a March 17 Tax Executive Institute event, said the form was “still being evaluated,” with potential changes under consideration to reduce taxpayer burden.

Actions ultimately carry more weight than assurances on pending guidance. So how will the IRS bring Form 6765 into closer alignment with taxpayer expectations and broader tax reporting norms?

Align With Objectives

In a September 2023 news release, and again in December 2024, the IRS commented that the revisions to Form 6765 aimed to provide consistency in tax reporting, “improve the information received for tax administration,” and support a more effective and efficient use of resources.

While those are legitimate objectives, the changes to Form 6765 fall short. They risk the opposite of the agency’s intent while imposing an outsized increase in taxpayer burden. Taxpayers have raised these concerns for years as the IRS continues to solicit feedback.

The IRS appears to be listening. Still, meaningful improvement will require collaboration toward a practical solution that allows the IRS to meet its objectives without imposing unreasonable reporting demands on taxpayers.

Burden Without Benefit

Form 6765’s new Section G requires taxpayers to report information they often don’t maintain in the ordinary course of business, such as categorizing qualified wages into direct research, direct supervision, and direct support.

The IRS may have asked for this categorization in response to the US Tax Court’s 2021 ruling in Little Sandy Coal Co. v. Commissioner, which held that direct support and supervision couldn’t constitute elements of a process of experimentation for the substantially all calculation. But the US Court of Appeals for the Seventh Circuit rejected that holding in 2023.

More recently, the taxpayer in George v. Commissioner met the substantially-all test through testimony and documentation, and the Tax Court noted that the determination didn’t require “mathematical precision.”

That raises a basic question: What is the value of requiring taxpayers to provide information they don’t ordinarily track, especially when that information may add little meaningful benefit to tax administration?

As Hudson further stated on March 17, “If taxpayers aren’t recording that now in their business records, is Section G going to be either very burdensome or are they going to come up with some sort of way to cobble the information together in a way that doesn’t necessarily do the IRS any good?”

Consistency and Guidance

Consistency in reporting was one IRS objective. But the current instructions lack the clarity needed to achieve such consistency. For example, the instructions don’t clearly explain what constitutes “new categories of expenses” that must be disclosed.

Recent discussions among more than 100 research credit practitioners from reputable firms of all sizes highlighted this problem. Practitioners offered different interpretations of how to respond to several items on the revised Form 6765.

Those interpretations couldn’t definitively be labeled right or wrong because the guidance was too limited. When the instructions leave room for multiple reasonable interpretations, this results in more variation in how taxpayers complete the form rather than more consistent results.

Many taxpayers rely on statistical sampling methodologies for the research credit. While the Form 6765 instructions acknowledge such use, it effectively makes that application meaningless for completing Section G.

When a taxpayer uses statistical sampling now, it must otherwise complete Section G regardless of whether the information requested was part of the statistical sample. The IRS should address this issue and provide practical guidance for reporting statistical sampling in the research credit context.

The Path Forward

The IRS’s goal to improve Form 6765 is understandable, particularly given the growth of R&D credit claims driven by providers promoting aggressive positions with limited taxpayer involvement or insufficient factual or legal support. But the form’s current version doesn’t accomplish those goals.

Requiring taxpayers to provide more data doesn’t alone produce more meaningful information. Instead, it risks imposing additional burden on taxpayers who depend on this important credit.

The IRS has an opportunity to improve Form 6765, but meaningful reform will require more than delayed implementation and continued requests for feedback. It will require timely collaboration to develop a practical reporting framework that asks for clear, useful information taxpayers can reasonably provide, promotes consistency, and supports tax administration without imposing unnecessary burden.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Travis Riley is a tax principal and Josh Harbin is a tax senior manager with Baker Tilly’s R&D tax services practice.

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