How to Prepare for the New Form 6765 and What Tax Teams Need to Know

The IRS has introduced major changes to Form 6765 in 2025, and if your company isn’t ready, the impact could be significant. These Form 6765 updates for 2025 bring stricter documentation rules and new review procedures that will affect how you claim the R&D tax credit.

Without a proactive plan, you could face delayed refunds, increased audit risk, or denied claims. Here’s what you need to know—and do—before filing.

What’s Changing on Form 6765?

The updated Form 6765 introduces several key revisions aimed at increasing transparency and reducing errors in R&D tax credit claims. Some of the most critical changes include:

Business Component Breakdown: Companies must report the top 80% of Qualified Research Expenses (QREs) across no more than 50 business components—meaning a higher level of detail is required.

Expanded Wage & Expense Reporting: You must now allocate wages, supply costs, and contractor expenses to specific business components rather than aggregating them.

Process of Experimentation Documentation: The IRS is requiring more transparency on what each research activity sought to discover and how it followed the scientific method.

These changes mean that high-level estimates and broad categories will no longer be acceptable.

What Tax Teams Need to Do to Prepare

To ensure your company’s R&D tax credit claims remain compliant and audit-ready, follow these key steps:

1. Revamp Your Business Component Strategy
The IRS is looking for specificity in how companies define their research projects. Make sure you:

• Identify your top 50 business components and categorize them clearly.
• Ensure each component aligns with IRS definitions of qualified research activities.
• Maintain documentation that links expenses directly to business components.

Pro Tip: Don’t wait until filing season—start reviewing your business component tracking process now to avoid scrambling later.

2. Strengthen Documentation & Expense Tracking
The IRS is cracking down on poorly documented claims. Ensure you:

• Maintain real-time documentation of R&D activities (not just after-the-fact interviews).
• Capture details about scientific uncertainty and the process of experimentation.
• Properly allocate wages, supply costs, and contractor expenses to individual business components.

Pro Tip: Implement a structured system for tracking expenses that ties back to Form 6765’s new reporting structure.

3. Prepare for Increased IRS Scrutiny
The IRS has introduced a new review process with “Classifiers” who evaluate refund claims before they reach an examiner. If a claim is incomplete or unclear, it could be denied outright.
To avoid this:

• Review your claim through the lens of an IRS examiner before filing.
• Ensure all required fields are filled out completely and correctly.
• Keep an audit trail of how research activities meet the four-part test required for R&D tax credits.

Pro Tip: If your company claims large R&D tax credits annually, consider a Pre-Filing Agreement (PFA) for additional protection.

Don’t Get Caught Off Guard

The IRS is raising the bar for R&D tax credit compliance with the new Form 6765. CFOs who take proactive steps now will ensure their companies maximize tax credits while reducing audit risk.

Need expert guidance? MASSIE’s R&D tax specialists are already helping companies navigate these changes.

Jason Massie, CPA, Esq.

As the Founder and President of MASSIE R&D Tax Credits, Jason is responsible for the quality, consistency, and integrity of our services. His strategic vision and leadership drive innovation within the company, encouraging collaboration and ne...