WASHINGTON, June 08, 2005 — The Internal Revenue Service (IRS) today announced the execution of letters of understanding with Toyota Motor North America, Inc. and Subsidiaries, and American Honda Motor Co., Inc. and Subsidiaries, outlining the terms of a Research Credit Recordkeeping Agreement (RCRA).
Negotiated by the IRS’ Large and Mid-Size Business (LMSB) Division, these RCRA agreements were drafted as part of a pilot program described in Notice 2004-11. The program was intended to help the IRS and LMSB develop and evaluate procedures to (a) resolve issues concerning the type and amount of documents that a taxpayer must maintain, retain, and produce to satisfy the recordkeeping requirements of section 6001 for the research credit; and (b) reduce the costs, burdens, and delays frequently encountered by taxpayers and the Service in examinations involving the research credit.
“These agreements reflect LMSB’s goals of streamlining and simplifying tax administration and reducing taxpayer burden,” said Deborah M. Nolan, LMSB Commissioner. “They also support our tax enforcement efforts by allowing us to redirect valuable resources to areas of higher compliance risk.”
In addition to Toyota and Honda, four other taxpayers applied for participation in the pilot program. Ultimately a total of five were accepted. The pilot program application period closed on May 10, 2004.
According to Notice 2004-11, taxpayers complying with the terms of their respective RCRAs, as established through the pilot program, are deemed to have satisfied recordkeeping requirements of Section 6001 of the IRS Code for purposes of the credit for increasing research activities.
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