By: Monika Diehl, VP of Operations
How to Safely Claim Your R&D Tax Credit According to the IRS
The latest memorandum and guidance from the IRS regarding filing for the R&D tax credit have increased the need for compliance, proper documentation, and having a reliable partner to guide you through the process.
In October 2021, the IRS Office of Chief Counsel released a memorandum regarding tax filing procedures for companies submitting claims for the credit in order to improve guidance on how to prove their validity. This memorandum significantly expanded the documentation required to accompany the filing of amended tax returns claiming R&D tax credits.
Furthermore, in early 2022, the IRS updated their FAQs for businesses looking to claim the R&D tax credit. The new update offers additional guidance based on trends of questions that the IRS receives from tax professionals and taxpayers alike.
One notable addition to the FAQs relates to a taxpayer’s ability to challenge the ruling of an invalid R&D claim in front of the IRS Independent Office of Appeals. If a claim is denied based on a timeliness determination, then it is eligible for an appeal. However, claims that are denied on the basis of being deficient or otherwise not processable are not eligible to enter the appeals process. This emphasizes the importance of precision, timeliness, and proper documentation from the very beginning of an R&D study, since an appeal is not guaranteed.
As requirements for the processes and documentation of the R&D tax credit continue to evolve, it is more important than ever to have an experienced partner to guide you in making complete, compliant studies.
At Clarus R+D, we’ve created a unique software platform that allows users to unlock the full potential of the R&D tax credit while remaining compliant with IRS standards. Our experts ensure that your claims are defensible and supported by all required documentation and proof.
ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.