On October 1, 2025, the Internal Revenue Service (IRS) announced an extension of the Form 6765 comment period and postponed certain reporting requirements related to the Credit for Increasing Research Activities through March 31, 2026. This decision gives taxpayers, tax professionals and industry stakeholders additional time to respond to the expanded disclosure requirements. As the IRS gathers feedback, Section G of Form 6765 will not be mandatory for tax year 2025.
The draft instructions for Form 6765 significantly expand the type of data that taxpayers must provide, moving beyond quantitative calculations and requiring qualitative and structural reporting at the business component level.
These updates stress the importance of preparing now for a reporting regime that demands more granular project-level documentation and clearer substantiation of research activities.
Mandatory Form 6765 Reporting for the 2026 Tax Year
For the 2025 tax year, Section G remains optional. Sections E and F are still require.
An expanded Section G – Business Component Information is required for most taxpayers (see exemptions), including:
- Identification of the number and type of business components (product, process, software, etc.)
- Descriptions of the information sought and uncertainties addressed
- Allocation of QREs by category (wages, supplies, contract research, cloud computing)
- An allocation of wages by role (direct research, supervision, support)
Section E and Section F disclosures are also mandatory, covering additional background and summary reporting of QREs.
The IRS has made clear that Sections E, F and G are expected to be consistently reported in 2026 and beyond, reflecting a permanent shift toward project-level substantiation.
Section G Exemptions
Certain taxpayers may always omit Section G, including:
- Qualified Small Businesses (QSBs) electing the payroll offset under Internal Revenue Code (IRC) Section 41(h)
- Taxpayers with less than $1.5 million in total QREs (controlled group basis) and less than $50 million in gross receipts
Research Credit Claim Transition Period Extension
The IRS also extended the research credit claim transition period until January 10, 2027. Accordingly, taxpayers will continue to have 45 days to supplement credit refund claims that are not complete. This is especially important for taxpayers who filed for a refund toward the end of the statute of limitations period.
Taxpayers submitting refund claims postmarked after June 18, 2024, must identify all business components and their respective research activities related to the Section 41 research credit claim for that year. They must also provide the total qualified expenses for employee wages, supplies and contract research for the year, for which they may use Form 6765.
Strategic Takeaways for R&D Claimants
1. Begin Building Component-level Granularity Now
Organize your research and development (R&D) project data by business component and begin mapping wage, supply and contractor expenses accordingly. Having this structure in place will help ensure readiness for 2025 filings.
2. Evaluate Exemption Thresholds
If your activities and gross receipts fall below the thresholds, you may qualify for reduced reporting. However, planning should still include tracking data at the business component level in case activity levels increase.
3. Treat 2025 as a Pilot Year
With Section G being optional for 2025, companies can use this year as a dry run to align internal data systems and assess readiness for the mandatory reporting in 2026.
4. Strengthen Documentation Processes
The revised Form 6765 requires narrative details that support the Four-Part Test. Taxpayers should move away from after-the-fact reconstructions and toward contemporaneous documentation of uncertainties, experimentation and outcomes.
Preparing for Enhanced Transparency in Form 6765 Reporting
The IRS’s extended Form 6765 comment period offers stakeholders more time to shape the final Form 6765 instructions, but the direction is clear: greater transparency and more detailed reporting will be required beginning in 2026. Parties interested in submitting feedback about the form may do so by emailing lbi.rt.team@irs.gov with the subject line “Instructions for Form 6765.”
By taking steps now — piloting Section G reporting in 2025, organizing project-level data and leveraging technology — taxpayers can be ready for a smooth transition.
Your Guide Forward
Cherry Bekaert’s technology platform enhances our ability to help clients navigate the new Form 6765 environment. Our process provides:
- Centralized project tracking that aligns with the IRS business component framework
- Automated data collection from human resources, payroll and general ledger systems
- Role-based dashboards that make wage allocations by activity and supervision more transparent
- Document libraries that store contemporaneous technical notes, meeting minutes and test results
Together, Cherry Bekaert’s technical Tax Credits & Incentives Advisory professionals, with our technology-driven process, make compliance with the new reporting rules more efficient, defensible and less burdensome for taxpayers.
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