Law & Order

IRS Permits Multi-Year R&D Tax Credit Claims on Amended Returns

By SEMA Washington, D.C., Staff

The Internal Revenue Service (IRS) will now allow taxpayers to claim the “simplified” research and development (R&D) tax credit on amended tax returns. The Alternative Simplified Credit (ASC) was created in 2006 to eliminate more complex calculations required under the original R&D tax credit, making it easier for small- and mid-size companies to take advantage of the program. The ASC allows businesses to compare their increased research activities against qualified expenses from the previous three tax years. The regular calculation methodology is more complicated and is based on a historic “base” period that can date back many years.

Under the new IRS rules, ASC calculations are no longer restricted to current returns but can also be applied to amended returns. Taxpayers may now revisit returns for taxable years still open to amendment (generally the previous three tax years) so long as the taxpayer has not previously claimed the credit using the regular credit calculation.

For more information, contact Stuart Gosswein at