It is not too late to take advantage of the payroll tax offset provision of the IRC Section 41 research credit. Pursuant to IRS Notice 2017-23, eligible startup businesses that failed to take advantage of the new payroll tax offset provision still have until December 31, 2017 to amend their 2016 tax returns to make the election. Please note, the original return must have been timely filed (with extensions).

In addition, in order to take advantage of this provision, the taxpayer must identify that the offset election is being made within the amended return, by either:

  1. Writing at the top of the Form 6765, “FILED PURSUANT TO NOTICE 2017-13”, or
  2. Attaching a statement to Form 6765, which reflects that the form is filed pursuant to Notice 2017-23.

The taxpayer may claim the payroll credit on its employment tax return for the first quarter that begins after it files the amended return reflecting the election to offset payroll tax.

On Dec. 18, 2015, the new payroll tax offset provision became available due to the signage of the Protecting Americans from Tax Hikes (PATH) Act of 2015.   You can learn more about the new provision and why it’s so beneficial to startup businesses here:

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