Retroactive R&D Tax Credit Claims: What Businesses Need to Know
Since the passage of the One Big Beautiful Bill Act (OBBBA), businesses across the country have been flooded with marketing emails promising massive “retroactive” R&D tax credit refunds before a supposed July 6 deadline.
Some of these claims are legitimate. Many are misleading.
As a firm that has helped companies prepare and defend R&D tax credit claims since 2009, we’ve seen a surge of confusion surrounding amended R&D credit claims, Section 174 relief, and IRS refund requirements.
Here’s what business owners and CPAs actually need to know before filing retroactive R&D tax credit claims.
Marketing Claim: July 6th is the deadline for claiming Retroactive R&D Credits
Reality: Valid R&D Credit Claims can be made on any amended return within the statute of limitations.
Understanding Retro R&D Tax Credit Claims
The “retro” R&D Tax Credit claims people are referring to involve amending tax returns with a form 6765. If a taxpayer paid taxes in these years, the newly claimed credit will generate a refund. This is nothing new. Taxpayers have always been allowed to amend returns to make R&D Tax Credit claims for tax years with an open statute (within three years from the date the original return was filed).
OBBBA R&D Tax Changes
From 2022 to the passage of OBBBA all businesses were forced to amortize R&D expenses over five years under Section 174. This meant loss of business deductions which resulted in a tax increases on R&D costs. Many companies opted to forgo claiming an R&D Tax Credit under Code Section 41.
OBBBA repealed Section 174 and now allows business to fully deduct R&D expenses as normal. It also gave retroactive relief for small businesses, allowing them to amend returns and deduct R&D expenses under the new Section 174A. This technically has nothing to do with R&D Tax Credits.
OBBBA puts deadline of July 6th 2026 for any small business wishing to amend returns to deduct previously amortized costs. Many companies who did not claim an R&D Tax Credit from 2022-2024 are seeking to use the small business provisions of OBBBA to amend returns and claim R&D Tax Credits before the July 6th deadline. In general, any R&D Credit claim will still be valid after July 6th as long as the statute is open.
Marketing Claim: Claiming R&D Credit Refunds is easy, the government wants you to have this incentive!
Reality: The IRS has new rules on what is required for a proper R&D Claim, getting the details wrong can cost you your refund.
How to Claim R&D Credits on Amended Returns
Before you start rushing to fill out 6765s and mail amended returns, it is important to note that there have been some changes in recent years to how the IRS processes refund claims from R&D Tax Credits.
The IRS has become increasingly wary of dubious R&D Credit claims from industries that often fail to pass the legal requirements. Thus, in 2022 the IRS adopted Chief Counsel Memo 20214101. This memo sets forth a list of required disclosures that taxpayers must submit for a valid credit claim. This includes:
- Identifying all business components to which the R&D Credit relates
- Identifying all of the research activities performed for each business component
It is critically important to understand that the way this information is presented will make or break your refund claim. The IRS has stated that it has the right to review these submittals and unilaterally reject claims. It is important to articulate research activities in a way that will pass the IRS sniff test.
The IRS also released Revenue Proclamation 2025-28 which provides detailed yet complex instructions for small businesses seeking to submit an amended with R&D related items.
Marketing Claim: Your Company is doing R&D, you just don’t realize it.
Reality: Not every company and every industry will qualify. The IRS has acknowledged an increase in improper claim from non qualified companies, hence the new rules for amended returns.
Who is eligible for the R&D Credit?
As with everything involving R&D Tax Credits, it is important to make sure that a business’s activities satisfy the four part test and other legal requirements before pursuing a refund claim on an amended return.
The Bottomline
- “Retro” R&D Tax Credits are always available on amended returns within statutory limits
- The IRS requires a detailed writeup describing the type of research activities being claimed
- If you get this write up wrong, the IRS can reject your claim without due process
- July 6th is the deadline for companies to amend returns under OBBBA small business provisions, NOT the deadline to claim R&D Credits on amended returns
ATS has assisted companies with R&D tax credit studies and amended refund claims since 2009. Our team helps businesses navigate complex IRS documentation requirements, Section 174 changes, and retroactive refund claims.
If you have questions regarding retroactive R&D tax credits or amended refund claims, contact ATS for an evaluation.
