Our Tax Resolutions team help you navigate IRS and State audits with confidence.

If you’re seeking advice on an existing audit, our team is available to support with all aspects of the examination from initial notice (IDR) through the appeals process. We ensure your claim is clearly substantiated, technically defensible, and positioned for the most favorable outcome.

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Trusted by Innovators Nationwide

benefit protected for our client

16M+

of cases retained full and original R&D incentive value

80%

months average resolution time frame

3-6

What is an R&D tax credit audit?

An R&D tax credit audit is a formal review by the IRS or State taxing authority to assess a company’s claim.

Why does the IRS / State Taxing Authorities examine R&D Credit claims?

The IRS and state taxing authorities may initiate an examination for several reasons, including: Random compliance reviews Industry-focused campaigns Inconsistencies within a tax return Insufficient technical narrative to support qualified research activities. In recent years, the IRS and state taxing authorities have increased scrutiny of R&D claims as part of broader compliance efforts. This is largely driven by a rise in both the number of claims filed and the dollar value of credits claimed across industries. As the burden of proof rests with the taxpayer, exam teams will often review the qualitative support to ensure the claimed costs are properly substantiated and justified.

What evidence do you need to provide the IRS / State Taxing Authorities?

A defensible R&D claim must include both quantitative and qualitative support: Quantitative Documentation Clear nexus between: Eligible projects (Business components) Payroll allocations and wage support Activities performed Associated costs Supply and contractor expense validation Qualitative Documentation Detailed technical project narratives Identification of uncertainties (design, capability, methodology) Evidence of process of experimentation Supporting materials: Design iterations Test results Project documentation Our deliverables are structured to be audit-ready from the outset, minimizing risk during examination.

What are the various levels of an R&D exam process?

Where we believe the appropriate evidence has been provided, we support our clients by working with your exam team(s) to ensure they have a clear understanding of the methodology employed when determining the costs eligible for the Federal and State R&D Credits. In the rare event that an agreed upon resolution can’t be achieved at exam, we will continue to support you during escalated levels of review that may include FastTrack or Appeals. Our proactive and evidence-led approach ensures clients are robustly represented, with a clear focus on achieving the most favourable and commercially sensible outcome.

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Auditors evaluate both:

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Technical eligibility – qualified research activity

Financial accuracy – qualified research expenses and nexus

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An audit does not automatically mean there is an issue with the claim.

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Why choose us

Audit-Ready, Defensible Deliverables

Our deliverables are designed to proactively address the questions most commonly raised by exam teams during an audit. The majority of Information Document Request (IDR) inquiries can be answered directly through our comprehensive study workpapers. This approach strengthens credibility with your exam team, shortens the audit cycle, and helps maximize the retention of your tax incentives.

Seamless, End-to-End Execution

From the moment you receive your Audit Notification Letter through final resolution—whether at exam or appeals—our team works directly with your exam team. We manage the entire process, minimizing the burden on your internal resources and CPA firm while positioning you for the most favorable outcome.

Specialized Expertise, Proven Experience

Our cross-functional team includes CPAs, EAs, industry-trained engineers, attorneys, and seasoned R&D professionals. This depth of expertise ensures that all exam inquiries are addressed strategically, with precision and technical accuracy.

Multinational Coordination

Our dedicated controversy team is equipped to defend R&D claims involving qualified expenditures across multiple jurisdictions. While the U.S. R&D credit remains the primary focus, we ensure global alignment with related considerations such as transfer pricing, cost sharing arrangements, and foreign tax credit regimes—helping you maintain a cohesive and defensible position worldwide.

Our efficient process

Audit Notification via an Initial Contact Letter

If the IRS decides to open an audit related to an R&D tax credit claim, the company will receive formal correspondence (such as Letter 566 or 3572A) stating that their tax return has been selected for examination. This letter typically specifies the areas of the tax return selected as part of the examination. At this initial stage, our team reviews the correspondence with you including a review of any initial Information Document Request (IDR). Our team will explain the implications of the audit in plain terms and will advise on the most appropriate next steps to ensure a structured and timely response.

Kick-off Meeting with the Exam Team and Information Gathering / IDR Response Preparation

During this stage, we will: Conduct a kick-off call with the exam team to ensure clarity around the areas of focus that are of concern and to provide full transparency to the work previously performed in determining the eligible tax incentives claimed Gather all necessary information and documentation from your team Review the specifics of the exam team’s points of concern Strategize on the most effective response, combining both technical and financial perspectives Our specialists work closely with key stakeholders to assess any further qualifying R&D evidence requested by the exam team. These focused inquiry workshops ensure that any technical and financial queries are covered comprehensively and tailored to address the exam teams questions effectively.

Subject Matter Expert (SME) Interviews

If the issue remains unresolved after submitting the IDR responses to the exam team, IRS specialists (e.g., engineers, scientists, etc.) may request to interview project SMEs to further vet the type of development activities undertaken. These interviews are performed to assess the level of technical uncertainty and process of experimentation performed to alleviate the technical uncertainty. Should the exam team still disagree with the claim at this stage, our resolutions team will assist in lodging an appeal, to ensure our clients are robustly defended and mitigate the need for the claim to be escalated to tax court.

Notice of Proposed Adjustment (NOPA)

Once the IRS concludes its review of the taxpayer’s claim, they will issue a NOPA outlining the IRS’ acceptance or proposed adjustment to the originally filed claim. Additionally, the NOPA will outline the IRS’ technical position for the adjustment. At this point, our team will work with you to gather any additional documentation and respond with additional technical arguments in an effort to resolve disagreements between what was originally filed and the IRS’ proposed adjustments to the claim.

Frequently
Asked
Questions

What happens if my claim remains unresolved after compiling a response?

If the issue remains unresolved after submitting responses to the exam team’s points of contention then the exam team will often request to interview a select number of project SMEs to better understand firsthand the development activities undertaken by the company. Further communication or calls with the exam team may also be necessary to address outstanding issues. Should the IRS still disagree with the claim at this stage, our resolutions team will assist in lodging an appeal, to ensure our clients are robustly defended and mitigate the need for the case to be heard by a tax court.

What happens if my R&D claim is subject to further questioning from an exam team?

The company receives an official communication from the IRS or state taxing authority regarding a R&D tax credit exam. This letter typically outlines the nature of the exam and any additional documentation or information required. You will then be required to respond to the IRS inquiry within 30 days of receiving an IDR. This usually involves compiling relevant evidence, providing clarification on any queries, and being proactive to highlight any other supporting information that may be relevant to aid the agent reviewing the case.

Why are exam teams reviewing an increased number of taxpayer claims?

In recent years there has been a rise in R&D examinations at both the federal and state levels affecting all sectors to ensure claims remain compliant. New IRS filing requirements were released in October 2021. CCM20214101F introduced requirements that taxpayers filing refund claims on amended returns must include additional supporting documentation at the time of filing. Additionally, in February 2026 the IRS issued final instructions requiring taxpayers to move to project-level / business component reporting of Qualified Research Expenditures (QREs) when filing their 2026 research credit claims via a revised Form 6765.

How long does an enquiry case take to resolve?

Examinations can range anywhere from a couple of weeks to a couple of years depending on the complexity of the exam and the level of disagreement between the amount originally claimed and the amount the exam team is willing to accept. When a study is properly documented, most examinations are settled within two to six months of receiving the Notice of Examination letter.

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