R&D Credit Mills

Classification B, legitimate, commonly abused. Real tax law with a real benefit. Promoters break it.

Sold as: "R&D credit study, no cost unless we find money", "you're doing R&D and don't know it", "innovation credit"

Form 6765 Section G becomes mandatory for tax year 2026. Every weak study is about to have to name its business components in writing.

The pitch

You are doing research and development and do not know it. The study costs nothing unless we find money, and the credit offsets tax you have already paid. With Sec. 174A restored, the same study now also produces an immediate deduction.

What it costs you if it is wrong

The credit is disallowed, and because Sec. 174A and Sec. 41 are now definitionally linked, an inflated study inflates the deduction too, so both go together. A refund claim that lacks the five items of information required for Sec. 41 specificity is invalid on its face rather than merely weak.

Red flags

No cost unless the provider finds a credit
The provider has never disqualified a project
Nobody reviewed the customer contracts for funded research
Wage allocations came from a percentage rather than time records
There is no business-component-level documentation
The provider will not sign the return or be named on it

Questions to ask the person selling this

1Which business components are you claiming, and where are they documented?
2Did you review my customer contracts for funded research and rights retention?
3Do the wage allocations come from time records or from a percentage?
4Is your fee contingent on the size of the credit?
5Will you sign the return or be disclosed on it?
6Would this file survive Form 6765 Section G if it were mandatory today?

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