R&D Tax Credit Compliance and Strategy Guide

This document is a guide focused on the evolving strategies and compliance requirements for R&D tax credits, particularly in light of recent changes in IRS regulations and practices. It outlines the breakdown of the new Form 6765, emphasizing the importance of clearly defined business components and detailed documentation requirements. The guide explains how the IRS's increased use of artificial intelligence for audit selection impacts the filing process, indicating that taxpayers must prepare more rigorously due to the IRS's enhanced analytical capabilities. It further discusses the significance of contemporaneous documentation over verbal testimony, stressing that the burden of proof lies with the taxpayer. Best practices are suggested, including collaboration with Subject Matter Experts (SMEs) to gather relevant data and maintain detailed records throughout the R&D process. The document underscores the shift in IRS expectations and the necessity for taxpayers to adapt their claims to align with these changes in order to ensure compliance and maximize their eligibility for credits.