How CPA Firms Choose an R&D Credit Partner: A Checklist

The short answer: judge an R&D credit partner the way you would judge any specialist whose work lands on a return your firm signs. Six things matter: substantiation at the business-component level, a clear line that your firm signs and files, a review step before anything reaches your client, careful handling of return information under §7216, an audit-support scope with stated exclusions, and a fee arrangement you can square with your own professional rules.

The checklist below turns each of those into questions to ask, describes what a good answer looks like, and flags the answers that should end the conversation. It is written for partners at small and mid-sized firms who want to offer the credit without building a study practice from scratch.

1. Substantiation at the business-component level

The four-part test applies separately to each business component (§41(d)(2)(A)), and for tax years beginning after 2025 the IRS asks for QREs by business component on Form 6765 Section G, unless the filer qualifies for an exemption. A partner whose output is a department-level percentage leaves your firm to rebuild the claim before it can be filed. Our Section G explainer covers the reporting rules.

Ask:

• How are business components identified and named, and do the names match the client’s own tickets, projects and ledger?
• Can every wage dollar be traced to a person, a role (conducting, directly supervising or directly supporting research) and a component?
• What evidence supports each part of the four-part test for each component, and how much of it was created during the work rather than after it?
• How are funded research and the other §41(d)(4) exclusions screened, including customer contracts and grants?
• Are the regular credit and the Alternative Simplified Credit computed on the same expense base, so the method choice is a decision rather than a default?

A good answer shows you a component list tied to the client’s records, narratives per component, and workpapers that reconcile to payroll and the general ledger. Ask to see a sample study before you see a proposal.

2. Who signs and files: your firm

An R&D partner should not sign the return or hold itself out as your client’s preparer. Your firm signs, files and answers for the positions on the return. That is a reason to insist on a written division of labor that covers who scopes the study, who gathers data, who drafts narratives, who computes, who reviews, who files, and who responds if the credit is examined.

Timing belongs in the same document. The §280C(c) reduced-credit election and the §41(h) payroll tax election must be made on a timely filed original return, including extensions, and the instructions allow the ASC on an amended return only if no credit was claimed for that year before. A study delivered after your filing deadline can cost the client choices that cannot be recovered.

3. Review before anything is issued

Referring a study out often means seeing the result only when the workpapers arrive. Ask instead:

• Can our reviewer see the computations, narratives and open questions while the study is being built?
• Can anything be issued to our client without our sign-off?
• Are issued versions locked and retained, so we can see what changed and when?
• What is in the preparer packet: Form 6765 with every section completed that applies, Form 8974 where the payroll election applies, QRE workpapers and any state computations?

The red flag is a finished PDF with a credit number and a request to file it.

4. Data handling: §7216 consent and redaction

Section 7216 makes it a misdemeanor for anyone in the business of preparing returns, or providing services in connection with preparing them, to knowingly or recklessly disclose return information or use it for any purpose other than preparing returns. Section 6713 adds a civil penalty for each disclosure or use.

The regulations allow a preparer to share return information with another preparer to help prepare a return, but only “so long as the services provided are not substantive determinations or advice affecting the tax liability” (Treas. Reg. §301.7216-2(d)). An R&D study is built on substantive determinations, so do not assume that exception covers it. Many firms obtain a written consent before sharing. Under §301.7216-3, a consent must name the preparer and the taxpayer, state the purpose, identify the recipient and the information to be disclosed, and be signed and dated by the taxpayer. For taxpayers that do not file a Form 1040, it may be in any format, including an engagement letter. Disclosure to a preparer located outside the United States requires consent first.

Then ask the partner:

• Is taxpayer-identifying information redacted before any AI processing?
• Where is data processed and stored, and which subprocessors touch it?
• Is client data ever used to train models?
• Are connectors to payroll and accounting systems read-only?
• How long is data retained, and how is it deleted at the end of the engagement?

5. Audit support: scope and what it excludes

Every partner says it supports audits. The useful questions are narrower:

• If the IRS examines the credit, who prepares the responses to information requests, who assembles the documentation, and who defends the technical position of the study?
• Who represents the client before the IRS? Practice before the IRS is generally limited to the taxpayer and to practitioners authorized under Circular 230, such as attorneys, CPAs and enrolled agents, so a provider that is not one should say who fills that role.
• What is excluded? Look for plain statements about other returns, other tax years, state credits, payroll taxes, penalties and interest.
• What voids coverage? Inaccurate or incomplete client information is a common condition, and a fair one, as long as it is written down.

Walk away from “audit-proof,” from any promise to pay the tax if the credit is disallowed, and from “we represent you” without a credentialed practitioner named.

6. How fee structures work, and the rules that apply to your firm

R&D credit work is priced in several ways that firms encounter: a fixed fee per study or per entity and year, time and materials, a software license for firms that run studies themselves, and fees calculated as a percentage of the credit. Each is common, and the engagement letter should say which one applies and who pays it.

What your firm has to check is its own position as the return preparer. Circular 230 §10.27(b) provides that a practitioner “may not charge a contingent fee for services rendered in connection with any matter before the Internal Revenue Service,” with exceptions for services connected with an IRS examination of an original return, certain amended returns filed within 120 days of a written examination notice, claims solely about statutory interest or penalties, and judicial proceedings. “Matter before the Internal Revenue Service” includes tax planning and advice and preparing or filing returns or refund claims. A contingent fee includes one based on a percentage of the refund or taxes saved, and any arrangement to reimburse the client’s fee if a position is challenged or not sustained.

Two further points. In Ridgely v. Lew (D.D.C. 2014), a federal district court held that the IRS could not enforce the contingent-fee rule against the preparation of ordinary refund claims, and the IRS did not appeal. And the AICPA Code of Professional Conduct (1.510.001) separately bars a member in public practice from preparing an original or amended tax return or claim for refund for a contingent fee, while 1.520.001 requires disclosure to the client of any referral fee paid or received. State boards of accountancy have their own rules as well.

The points to settle in writing before signing: how the partner is paid and by whom, whether your firm shares in any fee, and how your own fee for preparing the return is set. Your firm’s ethics or legal adviser is the right reviewer for how those rules apply to your engagement.

Red flags

• A guaranteed credit amount or a guaranteed audit outcome.
• Credit headlines stated as a percentage of payroll before anyone has looked at the work.
• A deliverable that is a spreadsheet and a narrative template, with no component-level evidence.
• Every engineer allocated at or near 100%, and every project qualifying.
• No funded-research review and no controlled-group analysis.
• Pressure to file before your firm has reviewed the study.
• An offer to “sort out the elections later,” when they cannot be made on an amended return.
• Vague answers on where client data goes.

The partner checklist

Questions to ask a prospective R&D credit partner

Questions to ask a prospective R&D credit partner

Area	Ask	A good answer
Substantiation	How are business components identified, and how is each wage dollar traced?	Components named from the client’s records; wages by person, role and component
Four-part test	What evidence supports each test for each component?	Contemporaneous records, with the alternatives the team evaluated
Exclusions	How are funded research and the other §41(d)(4) exclusions screened?	Contracts and grants reviewed for payment and rights terms
Signing and filing	Who signs and files the return?	Your firm, in writing; the partner does not act as preparer
Review	Can anything reach our client before our sign-off?	No; your reviewer sees the work in progress and approves issuance
Deliverables	What is in the preparer packet?	Form 6765 including Section G where required, Form 8974 where elected, workpapers, state figures
Timing	Will we have the study before the filing deadline?	A schedule that protects the §280C(c), ASC and §41(h) elections
Data handling	How is return information protected?	§7216 consent where needed, redaction before AI, read-only connectors, no model training
Audit support	What is covered, what is excluded, and who represents the client?	Written scope and exclusions; representation by credentialed practitioners
Fees	How is the partner paid, by whom, and does our firm share in any fee?	A written fee arrangement your firm has reviewed against its own professional rules

Where Ricerca’s firm portal fits

Ricerca is a software-led R&D credit study platform, and R&D experts finalize every study. Through the CPA Firm Portal, your firm manages every client engagement from one dashboard, invites client contacts and tracks outstanding requests, reviews computations and deliverables before they are issued, and pulls filing-ready figures and forms for the return. Nothing is issued to your client until your firm has reviewed it.

Ricerca does not sign or file the return and does not hold itself out as your client’s preparer. Your firm signs and files the return. Taxpayer-identifying data is redacted before AI processing, client data is never used to train public or third-party models, and accounting and payroll connectors are read-only; the security page has the detail. Every study includes Audit Protection, which covers the R&D study and the related federal credit, with its exclusions stated; representation before the IRS, where it is needed, is performed by credentialed practitioners. Firm engagements are quoted after a scoping conversation. For the substance behind the claim itself, start with the R&D tax credit guide.

FAQ

Does using an R&D credit partner change who the preparer is?

It should not. The partner builds the study and the substantiation; your firm reviews the positions, signs the return and files it. Get that division of labor in writing.

Do we need client consent to share return information with an R&D partner?

Often, yes. The preparer-to-preparer exception in the §7216 regulations does not extend to services that make substantive determinations affecting tax liability, which is what a study does. For business clients, a consent meeting §301.7216-3 can sit in the engagement letter.

Can a CPA firm charge a percentage of the R&D credit?

The AICPA Code bars members from preparing an original or amended return or refund claim for a contingent fee, and Circular 230 §10.27 restricts contingent fees for matters before the IRS, subject to its exceptions and the Ridgely v. Lew decision on ordinary refund claims. State board rules also apply. Get your own ethics or legal review before agreeing to any fee tied to the credit.

What should the deliverable package include?

The study report, QRE workpapers that reconcile to payroll and the ledger, Form 6765 with Section G where required, Form 8974 where the payroll election applies, state computations, and an audit file you could hand to an examiner.

Sources

• 31 CFR §10.27 - Fees and §10.3 - Who may practice (Circular 230, eCFR)
• IRC §7216 and IRC §6713 (Cornell Law School, Legal Information Institute)
• 26 CFR §301.7216-2 and §301.7216-3 (eCFR)
• Ridgely v. Lew, No. 12-cv-565 (D.D.C. July 16, 2014) (PDF) (GovInfo)
• CPA Practice Advisor - IRS Concedes Defeat on Circular 230 Contingent Fees (September 24, 2014)
• AICPA Code of Professional Conduct (PDF), 1.510.001 Contingent Fees Rule and 1.520.001 Commissions and Referral Fees Rule
• IRS - Instructions for Form 6765 (Rev. December 2025)
• IRC §41 - Credit for increasing research activities (U.S. House, Office of the Law Revision Counsel)