For Treasury and the IRS | Research Credit Integrity Alliance

Key points

Swanson Reed's main request is to Congress. Some steps would not need new legislation.
Treasury has already proposed treating contingent fees for preparing returns and refund claims before examination as disreputable conduct under Circular 230.
Form 6765 and the research credit refund claim requirements set what a claim must show. Neither currently asks who prepared the claim or how they were paid.

Where the rules stand today

Circular 230

Section 10.27 of Circular 230 bars a practitioner from charging a contingent fee for services in connection with any matter before the IRS, subject to exceptions for examinations, certain refund claims filed within 120 days of an examination notice, interest and penalty claims, and judicial proceedings.1 It defines a contingent fee to include a fee based on a percentage of the refund reported on a return or of the taxes saved, and a fee that the practitioner will reimburse if a position is challenged or not sustained.1

In 2014 the District Court for the District of Columbia held that the IRS lacked statutory authority to apply those restrictions to the preparation and filing of ordinary refund claims, meaning claims filed after the original return and before an audit begins, and permanently enjoined enforcement in that context.2

On December 26, 2024, Treasury proposed to remove section 10.27 and add section 10.51, under which charging a contingent fee in connection with the preparation of an original or amended return, or a claim for refund or credit prepared before the examination of the return, would be disreputable conduct.3 Treasury relied on its authority under 31 U.S.C. 330(c) to censure, suspend or disbar practitioners who engage in disreputable conduct, whether or not the conduct constitutes representation of a client, and explained that, unlike current section 10.27, proposed section 10.51 would not depend on the preparation of a return or refund claim being practice before the IRS.3 We have not found a final rule in the Federal Register.

Research credit refund claims

In a Chief Counsel memorandum released on October 15, 2021, the IRS set out the information a research credit refund claim must contain to be valid under Treas. Reg. section 301.6402-2(b)(1).4 Effective June 18, 2024, the IRS waived two of those items: the names of the individuals who performed each research activity and the information each sought to discover.5 A refund claim must still identify the business components, identify the research activities for each component, and give total qualified wage, supply and contract research expenses for the year.5 Taxpayers have 45 days to perfect a deficient claim during a transition period that runs through January 10, 2027.56

Form 6765

The current instructions for Form 6765 (Rev. December 2025) state that Section G, Business Component Information, is optional for tax years beginning before 2026 and required for tax years beginning after 2025, unless the filer is a qualified small business that claims a reduced payroll tax credit, or reports a credit on an original return with total qualified research expenses of $1.5 million or less and average annual gross receipts of $50 million or less.7 Where Section G is required, a filer reports business component information for at least 80 percent of total qualified research expenses, up to 50 business components.7 Column 49(f) applies to amended returns that add or increase a research credit.7

Neither Form 6765 nor its instructions ask who prepared the credit computation or on what basis that person was paid.78

What could be done without legislation

Our position

Swanson Reed asks Congress to prohibit contingent fees in federal research credit engagements. While that is considered, Treasury and the IRS could act within existing authority in three areas.

Circular 230. Finalize a contingent fee rule for practitioners that clearly covers research credit refund claims prepared before examination, as the December 2024 proposal would. A final rule would apply only to practitioners under Circular 230, which is one reason we ask Congress for a statutory rule.

Form 6765 instructions. Ask, on the form or a required attachment, for the basis of any fee paid to a third party for preparing the credit claim (fixed, hourly, or contingent on the credit) and for the name of the preparer and of the person who reviewed the technical content. This mirrors our proposals on fee disclosure on the claim and preparer identification.

Refund claim requirements and data. Keep the existing information requirements for research credit refund claims, add the fee basis and preparer details to them, and publish aggregate data drawn from Section G and from refund claim reviews, as set out in our data and reporting proposal.

Whether a particular measure falls within Treasury's existing authority is a legal question. The 2014 decision and Treasury's 2024 proposal show that the answer can depend on how the measure is framed.23

Swanson Reed staff communicate with congressional committee staff and with Treasury and IRS officials about this proposal. SR Tax Services LLC is not registered under the Lobbying Disclosure Act of 1995 because its lobbying activity has not reached the Act's registration thresholds.9 We review this every quarter. Written comments filed in public rulemakings are not lobbying contacts under the Act.10

Swanson Reed publishes this initiative and has a commercial interest in how R&D tax advisers are paid. See Conflicts of interest. Officials can contact the initiative at hello@researchcreditintegrity.org.

Sources

Treasury Department, Circular No. 230, Regulations Governing Practice before the Internal Revenue Service (Rev. 6-2014), 31 CFR section 10.27(b) and (c)(1). https://www.irs.gov/pub/irs-pdf/pcir230.pdf (accessed 11 October 2026). Back
United States District Court for the District of Columbia, Ridgely v. Lew, Civil Action No. 1:12-cv-00565 (CRC), Memorandum Opinion (July 16, 2014), reported at 55 F. Supp. 3d 89 (D.D.C. 2014), pages 1 and 14 to 15. https://www.govinfo.gov/content/pkg/USCOURTS-dcd-1_12-cv-00565/pdf/USCOURTS-dcd-1_12-cv-00565-1.pdf (accessed 11 October 2026). Back
Treasury Department, Regulations Governing Practice Before the Internal Revenue Service, notice of proposed rulemaking, REG-116610-20, 89 FR 104915 (December 26, 2024), Explanation of Provisions B and proposed section 10.51. https://www.federalregister.gov/documents/2024/12/26/2024-29371/regulations-governing-practice-before-the-internal-revenue-service (accessed 11 October 2026). Back
IRS Office of Chief Counsel, Memorandum 20214101F, I.R.C. section 41 Research Credit Refund Claims (release date October 15, 2021), Questions Presented and Short Answers. https://www.irs.gov/pub/irs-lafa/20214101f.pdf (accessed 11 October 2026). Back
Internal Revenue Service, Research credit claims (Section 41) on amended returns frequently asked questions, introduction and FAQ 21. https://www.irs.gov/businesses/corporations/research-credit-claims-section-41-on-amended-returns-frequently-asked-questions (accessed 11 October 2026). Back
Internal Revenue Service, IRS extends the period for feedback on Form 6765, IR-2025-99 (October 1, 2025). https://www.irs.gov/newsroom/irs-extends-the-period-for-feedback-on-form-6765 (accessed 11 October 2026). Back
Internal Revenue Service, Instructions for Form 6765 (Rev. December 2025), What's New; Section G, Business Component Information; Column 49(f). https://www.irs.gov/pub/irs-pdf/i6765.pdf (accessed 11 October 2026). Back
Internal Revenue Service, Form 6765, Credit for Increasing Research Activities (Rev. December 2024). https://www.irs.gov/pub/irs-pdf/f6765.pdf (accessed 11 October 2026). Back
2 U.S.C. 1603(a)(1) and (a)(3), registration and its exemption thresholds, and 2 U.S.C. 1602(10), definition of lobbyist. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title2-section1603 (accessed 17 October 2026). Back
2 U.S.C. 1602(8)(B)(xiv), a written comment filed in the course of a public proceeding is not a lobbying contact. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title2-section1602 (accessed 17 October 2026). Back