The American Institute of CPAs (AICPA) has requested immediate guidance from the US Department of the Treasury and the Internal Revenue Service (IRS) on the recently enacted section 174A.  

The section addresses the treatment of domestic research and experimental (R&E) expenditures, commonly referred to as domestic research costs, for small business taxpayers. 

AICPA is advocating for Treasury and the IRS to allow eligible small business taxpayers to deduct domestic research costs directly on their 2024 federal income tax returns.  

It is expected to eliminate the need to capitalise these costs, which could otherwise lead to administrative burdens and compliance risks for taxpayers. 

According to the accounting industry body, many eligible taxpayers have not yet filed their 2024 income tax returns and face uncertainty regarding the deduction of these costs.  

Without immediate guidance, taxpayers may be forced to amend their returns later, increasing their compliance burdens. 

To address this, AICPA recommends that Treasury and the IRS issue guidance allowing taxpayers to deduct 2024 domestic research costs on their originally filed returns.  

It would require a statement or reference indicating an election under Section 70302(f)(1)(A).  

Additionally, taxpayers may amend their 2022 and 2023 returns to deduct domestic research costs paid or incurred in those years. 

If the election impacts a year with a reported net operating loss (NOL), taxpayers should be permitted to adjust the NOL in the carryforward year(s) instead of amending the original NOL year return. 

This is expected to streamline the process and reduce unnecessary administrative tasks. 

AICPA Tax Policy & Advocacy senior manager Reema Patel said: “Providing the guidance cited in the AICPA’s comment letter allows immediate tax relief to eligible taxpayers and resolves uncertainty for those who may have already deducted 2024 domestic research costs.  

“This guidance benefits sound tax administration for impacted taxpayers, practitioners, and the IRS and we urge Treasury to act immediately to provide taxpayers with certainty and allow them to meet their tax obligations with minimal confusion.” 

In July 2025, AICPA announced its support for a bill introduced by Senator John Fetterman.  

The Survivor Assistance for Fear-free and Easy Tax Filing Act of 2025 (SAFE Act), identified as S. 2129, aims to provide a critical tax filing option for individuals who have experienced spousal abuse or abandonment.