IDR guide
How to Respond to R&D Tax Credit IDRs
A practical response workflow for IRS IDRs on Section 41 research credit examinations: intake, evidence, drafting, and quality control.
Last Reviewed: August 2026
Step 1: Intake and Scope
Read the IDR twice. List every discrete ask. Separate document production from narrative explanation. Note whether the request covers one project, one year, or the entire claim.
Assign an owner for technical content and an owner for cost support. Schedule a short alignment call so terminology stays consistent.
Step 2: Build the Exhibit Room
Create a folder structure by IDR number and exhibit. Use stable exhibit labels (e.g., IDR-03-Ex-A). Prefer contemporaneous records: tickets, lab notes, design reviews, timesheets, GL detail, contracts.
Avoid dumping unstructured email archives. Examiners reward clarity; volume without an index creates follow-up questions.
Step 3: Draft the Narrative
Answer the question asked. Map each project to the four-part test where relevant: permitted purpose, technological in nature, elimination of uncertainty, and process of experimentation.
Cross-check wage names, project titles, and years against prior IDR responses and the filed Form 6765 support so you do not contradict yourself.
Step 4: Quality Control Before Send
Have a second reader check for internal consistency, missing exhibits, and over-broad admissions. Confirm privilege strategy with counsel where appropriate.
Submit on time with a short cover letter listing exhibits and remaining items, if any, on an agreed follow-up date.
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