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A tax form updated during the previous administration will be amended to better serve manufacturers’ and other businesses’ interests.

What’s going on: “A top IRS official had a message this week—we’ve heard you on the R&D credit form,” POLITICO Pro’s Morning Tax newsletter (subscription) reported on Thursday.

• “Taxpayers have until the end of the month to weigh in on Form 6765, after the IRS extended the comment period. But David Hudson, an IRS senior adviser, said at a Tax Executives Institute event this week that the agency was deep into its examinations into how to make further updates to the form.”
• This week, the NAM urged the IRS and Treasury Department to recognize “the importance of improvements to Form 6765 to ease the excessive compliance burden on manufacturers.”
• Updates in 2023 and 2024 doubled the length of the document.

Why it’s been a problem: “The problem is that business groups have said the current instructions aren’t clear enough and have asked for further guidance,” POLITICO Pro reports.

• The “increase in compliance costs diminishes the net value of the R&D credit, particularly for taxpayers that already invest heavily in compliance systems and internal controls,” the NAM told the administration this week.

What’s going to be done: The IRS has begun “looking into the mandate that companies break down research spending by business component”—a top priority for the NAM.

• The IRS is also reviewing its approach to statistical sampling, which it allows businesses to use in determining research costs.
• “I think there will be a fix,” Hudson said via Tax Notes. “It will not be this way in the future.”

The NAM responds: “Manufacturers are encouraged to see the IRS recognize the need for improvements to the R&D tax credit,” NAM Managing Vice President of Policy Charles Crain told the outlet.

• “The excessive costs of compliance and the exclusion of factory-based research weaken the effectiveness of the R&D credit as a tool for economic growth.”