OFFICE OF CHIEF COUNSEL IRS MEMORANDUM
October 24, 2022 - Douglas Myser
Office of Chief Counsel IRS Memorandum. This concerns Internal Revenue Code Section 41, Research Credit Refund Claims. In an administrative claim for refund or credit for the I.R.C. Section 41 research credit, what information must a taxpayer include at the time the refund claim is filed with the IRS for the refund claim to the valid under Treasury Reg. Section 301 ? Office of Chief Counsel IRS Memorandum.
For a taxpayer refund claim to be valid, is must at a minimum, identify all the business components to which the I.R.C. Section 41 research credit claim relates for that year. For each business component, identify all research activities performed, identify all individuals who performed each research activity, and identify all the information each individual sought to discover. Provide the total qualified employee wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year. They must also sign a declaration under penalty of perjury verifying the facts.
For the statute of limitations, there are no statutory provisions specific to I.R.C. section 41 for research credit claims, so the general provisions of tax filing of claims would prevail. That is, taxpayers may be entitled to a credit or refund only if they have filed a claim within three years of the date of Form 1040 or Form 1120 was filed or two years from the time the tax was paid, whatever period expires later. The amount of credit or refund shall not exceed the portion of the tax paid within the period immediately preceding the filing of the claim equal to three years plus any extension of time for filing the return. If no claim was filed within such three year period, the amount of the credit or refund shall not exceed the portion of tax paid during the two years immediately preceding the filing of the claim.