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What Does the Marijuana Opportunity Reinvestment and Expungement Act Mean for the R&D Tax Credit?

On April 1, 2022, The House of Representatives passed legislation to decriminalize marijuana at the federal level. Known as the Marijuana Opportunity Reinvestment and Expungement Act, it passed mainly along party lines at 220-204, with three Republicans voting in favor. It appears unlikely that the legislation will pass the Senate as currently constituted, as it would require 60 votes.

The IRS’s New R&D Documentation Demands

It’s no secret that the IRS is tightening its tax-compliance belt, promising an increase in the number of corporate tax audits, more transfer pricing scrutiny—and now according to the IRS’s Chief Counsel Memo released on October 15—new guidance regarding R&D tax credit refund claims. Why? The IRS wants to make screening refund claims for validity easier for the agency to handle, and a new level of documentation is a good place to start.