The IRS is ramping up its review of R&D tax credits, even as the agency faces major staff reductions. This shift brings new compliance hurdles for businesses seeking these valuable incentives. Here’s how to protect your claims and maximize your returns.
What's Changing at the IRS
Recent changes at the IRS mean fewer agents are handling more claims, but the agency’s focus on R&D tax credit enforcement hasn’t changed. The IRS continues to flag common issues like weak documentation, overstated activities, and a lack of clear connection between expenses and qualified research.
Key compliance challenges coming in 2026:
- Stricter documentation standards – The IRS now expects real-time records that prove technological uncertainty, systematic testing, and detailed tracking of qualified expenses.
- Longer audit timelines – With fewer staff, reviews take longer, especially if there are questions about your claims.
- More scrutiny for first-time filers – New claimants should expect extra documentation requests as the IRS checks eligibility.
- Higher penalties for poor documentation – Claims without strong support are more likely to be denied and may face steeper penalties.
Critical Filing Changes for 2026
Businesses must keep up with changing IRS rules while getting less support from the agency:
New R&D capitalization rules – Section 174 now requires you to capitalize and amortize R&D expenses over five years (or 15 years for foreign research). This change, effective for tax years starting after December 31, 2021, can have a big impact on your cash flow and credit calculations.
Form 6765 is more complex – The R&D credit form now demands detailed, activity-by-activity documentation—something most businesses can’t provide without specialized help.
Coordinating state and federal credits – If you operate in multiple states, you’ll face complex compliance as state programs increasingly differ from federal rules.
How the Big 6 Firms Miss Out on Savings
Traditional accounting firms like KPMG often treat R&D credits as just another tax item, not a specialized field that requires deep technical know-how. This approach leads to three major gaps:
Shallow qualification reviews – Broad assessments miss nuanced activities that actually qualify—especially in software, process improvements, and manufacturing innovation.
Reactive compliance – Generic documentation strategies fall apart under IRS scrutiny, leaving your business exposed during audits.
Missed state optimization – Without a dedicated R&D focus, firms overlook opportunities to stack credits across federal and state programs, leaving money on the table.
The Boast Advantage: Specialized Expertise When It Matters Most
Boast brings together advanced AI and experienced R&D tax credit specialists who understand both innovation and IRS requirements inside and out:
Proactive audit defense – Our platform builds thorough documentation from day one, creating a rock-solid record that anticipates IRS questions before they come up.
Maximum qualification – Our experts uncover all eligible activities across your company, including often-missed areas like internal software tools, supply chain improvements, and quality control upgrades.
Multi-jurisdiction optimization – We navigate the complexities of federal, state, and provincial programs to maximize your total returns while keeping you fully compliant.
Year-round value – Unlike firms that disappear after filing, our platform delivers ongoing optimization, policy updates, and strategic advice all year long.
Immediate Actions to Safeguard Your 2025 Claims
With IRS resources shrinking but enforcement as tough as ever, specialized expertise is more important than ever:
- Audit your current documentation – Make sure you have real-time records that prove technological uncertainty, systematic testing, and proper allocation of qualified expenses.
- Review qualification criteria – Confirm your claimed activities meet all four tests: technological uncertainty, experimentation, technological basis, and qualified purpose.
- Explore state opportunities – Many states offer enhanced credits or alternative calculations that can significantly boost your total return.
- Build audit-ready systems – Put documentation practices in place that create defensible records as work happens—not after the fact.
Get Expert Advice Before You File
Don’t let shrinking IRS capacity and growing complexity put your R&D tax credits at risk. Boast’s specialized expertise helps you claim every dollar you deserve, with ironclad audit protection.
Book your free R&D credit assessment to see how our technology-plus-expertise approach delivers bigger returns and stronger compliance than traditional accounting firms or tech-only providers.
About Boast: Boast helps organizations claim and access eligible R&D tax credits, reducing audit risk and saving time in both Canada and the United States. We combine in-house technical and R&D tax expertise with advanced AI to help companies easily navigate complex tax credit programs. Since 2011, we’ve helped over 1,700 businesses across North America access more than $625 million in innovation funding.
