Effective January 11, 2022, taxpayers submitting a Research Tax Credit refund claim must now include extensive substantiation to validate the claim. While IRS initially allowed a one-year transition period, allowing taxpayers 45 days to perfect rejected claims, IRS has recently extended this period for the second time. The transition period is now set to expire on January 10, 2026.

This requirement represents a significant change, as it applies at the time of submission rather than during examinations, where IRS has traditionally requested business component support.

Taxpayers who fail to meet the new documentation standards by the end of the grace period risk having their claims deemed deficient, with no opportunity to amend or perfect them. This could prevent taxpayers from seeking judicial review, emphasizing the importance of compliance with the updated rules.

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