Under new IRS Regulations issued this week (T.D. 9666), taxpayers can now claim the R&D tax credit using the alternative simplified credit method, or ASC on amended tax returns. Previously this election to claim the ASC for R&D credits had to be made on originally filed tax returns, even if this meant filing a protective ASC election claiming a small amount or no amount of qualified research expenditures towards the R&D credit on the original return.
Taxpayers now have additional time to model out whether the ASC or regular R&D credit makes more sense to claim each tax year, and this provides the opportunity for many companies with little or no base period (1984-1988) documentation to use the ASC to claim the R&D credit as the ASC only refers back to the prior 3 years of R&D expenditures in calculating a current year R&D tax credit, rather than digging up records from the 1980s. This has been a big concern as we get further and further away from the 1980s as the R&D credit gets extended, typically every two years.