On October 1, 2025, the Internal Revenue Service issued IR-2025-99, providing important updates on the ongoing rollout of the revised Form 6765, Credit for Increasing Research Activities, commonly referred to as the R&D Tax Credit. The announcement extends the comment period for the draft instructions, delays the requirement to complete Section G and lengthens the transition period to perfect research credit refund claims.

When the IRS first released the revised Form 6765 in mid-2024, one of the most significant changes was the introduction of Section G. This section would have required taxpayers to provide far more granular information on their research credit claims, including detailed disclosures about research activities, itemized expenses broken out by category and component-level reporting tied to each business unit.

In total, the proposed Section G imposed over 600 new data points that taxpayers would need to provide at the time of filing.

For many businesses, this raised concerns about administrative burden and compliance costs. The R&D Tax Credit has long been intended to spur innovation and investment, but the prospect of such detailed disclosures threatened to shift resources away from R&D efforts and toward compliance and data collection.

Section G Still Optional 2025 Filings

When the IRS released the draft instructions in December 2024, it announced that Section G reporting would be optional for 2024 filings but required beginning with tax year 2025. That timeline has now shifted. In response to widespread feedback from taxpayers, practitioners and industry groups, the IRS has determined that Section G will also be optional for 2025 filings (i.e. processing year 2026). Revised instructions are expected in January 2026 and the requirement to complete Section G will now begin with tax year 2026, subject to limited exceptions for certain qualified small businesses and filers with lower levels of qualified research expenses. This delay reflects the agency’s recognition of the significant compliance challenges posed by Section G and its willingness to continue engaging with stakeholders before making the reporting mandatory.

Refund Claim Transition Period Extended

Separately, the IRS also announced an extension of the transition period for research credit refund claims. Taxpayers will continue to have 45 days to perfect a refund claim before the IRS makes a final determination, with this transition period now running through January 10, 2027.

To be considered valid, refund claims must still include identification of the business components to which the credit relates, a description of research activities performed and totals of qualified wages, supply expenses and contract research expenses. Taxpayers will still need to demonstrate that claims meet detailed documentation standards even as the 45-day “perfecting” window remains in place through January 2027. Reviewing refund claim procedures now will ensure that businesses are well-positioned to withstand IRS scrutiny and avoid delays in obtaining valuable refunds.

Practical Implications for Businesses

The IRS’s decision to postpone the mandatory implementation of Section G provides taxpayers temporary reprieve, but it should not be mistaken for a signal to pause preparations. Businesses that claim the R&D credit should use this extension as an opportunity to evaluate whether their internal systems and processes are capable of capturing the detailed information Section G will eventually require. Because the proposed version of the Form would have required more than 600 new data points, most companies will need to review their current recordkeeping practices and consider whether additional tracking, software tools or coordination among finance, tax and R&D departments will be necessary.

Taxpayers should also take advantage of the extended comment period, which runs through March 31, 2026. This is an important chance to engage directly in the rulemaking process by identifying aspects of Section G that are unclear, unduly burdensome or that may unintentionally disadvantage certain industries or company sizes. Providing this feedback not only helps shape the final instructions but also ensures that the IRS better understands the practical realities businesses face in complying with these requirements.

While Section G will be optional for 2025, businesses should consider treating the year as a “trial run” to test their ability to compile and report the required data. Doing so now can help identify gaps and ease the transition to mandatory compliance in 2026, rather than facing a steep learning curve once the reporting becomes unavoidable.

Conclusion

The IRS’s announcement underscores the balance it must strike between ensuring integrity in the R&D Tax Credit program and minimizing undue taxpayer burden. Businesses now have more time to provide feedback, prepare systems and adjust compliance strategies before Section G becomes mandatory. Proactive planning today will help mitigate disruption when the rules take full effect.

If you have questions about the IRS’s announcement or Section G, please feel free to reach out to any member of our Tax team.

October 2, 2025