IRS Issues Guidance For Claiming Refundable R&D Credit

The IRS has issued guidance (Notice 2017-23) for the new provision allowing eligible taxpayers to claim up to $250,000 of R&D credit against payroll taxes. The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) amended Section 41(h) to provide that for tax years beginning in 2016 or later, eligible taxpayers with $5 million or less in gross receipts and no gross receipts for any tax years preceding the last five years, including the year of the claim, can elect to apply a portion of the R&D credit against the FICA tax liability. The notice includes guidance on qualifying taxpayers, the definition and aggregation rules for gross receipts, retroactive elections for 2016 and the credit carryforward.