IRS Extends Transition Period for Research Credit Refund Claims, Makes Section G Optional for Tax Year 2025

The IRS on October 1, 2025, announced in IR-2025-99 an extension of the comment period for the draft instructions to Form 6765, Credit for Increasing Research Activities, and a delay in the mandatory implementation of Section G reporting. The IRS also extended the transition period for research credit refund claims through January 10, 2027. The IRS’s latest announcement provides taxpayers with additional time to prepare for the revised reporting requirements and to submit feedback that may influence the final instructions for tax year 2025.

Background

The IRS first released a revised draft of Form 6765 in June 2024, followed by draft instructions in December 2024. For prior coverage, see IRS Issues Revised Draft Form 6765, Credit for Increasing Research Activities and IRS Seeks Feedback on Draft Instructions for Form 6765.

These revisions introduced new reporting sections, including Section G, which focuses on business component detailed information and reporting for controlled groups. In response to stakeholder feedback requesting more time to evaluate and comment on the proposed changes, the IRS has extended the comment period and delayed the mandatory implementation of Section G.

Extended Comment Period

The IRS has extended the deadline for submitting feedback on the draft instructions for Form 6765 through March 31, 2026. Tax professionals and stakeholders are encouraged to submit comments to lbi.rt.team@irs.gov using the subject line “Instructions for Form 6765.” The IRS has committed to reviewing all feedback and expects to release the final instructions for tax year 2025 (processing year 2026) in January 2026.  

Section G Reporting Delay

Section G, which requires detailed reporting of business components, will now be optional for all filers for tax year 2025. This change provides additional time for taxpayers to prepare for the new documentation requirements.

Beginning in tax year 2026, Section G will be mandatory for all filers, with optional reporting for:

• Qualified small business (QSB) taxpayers, as defined under IRC Section 41(h)(3), who elect the reduced payroll tax credit; or
• Taxpayers with total qualified research expenses (QREs) of less than $1.5 million and gross receipts of less than $50 million, determined at the control group level and under Section 448(c)(3) (excluding subparagraph (A)), claiming the credit on an original filed return.

Research Credit Claim Transition Period

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

To be considered sufficient, refund claims postmarked after June 18, 2024, must include:

• Identification of all business components to which the Section 41 credit relates;
• Description of research activities performed for each business component; and
• Reporting of total qualified employee wage, supply, and contract research expenses for the claim year.