AICPA Says IRS Notice 2025-75 Is Unworkable — Here's What They're Asking For

The AICPA just told the IRS what thousands of tax professionals have been thinking: Notice 2025-75 is a mess.

The notice — which deals with Section 174 research and experimental expenditure capitalization — includes a "determine and document" requirement that the AICPA called "ambiguous and potentially onerous." They're formally asking Treasury to replace it with a simple safe harbor or eliminate it entirely.

If you've been wrestling with Section 174 compliance, this is good news. The AICPA is fighting for you.

What's the Problem?

Section 174 requires taxpayers to capitalize and amortize research and experimental (R&E) expenditures over five years. It's been a headache since the Tax Cuts and Jobs Act made the change effective in 2022, but Notice 2025-75 made things worse.

The notice added a requirement that taxpayers "determine and document" whether certain expenditures qualify under Section 174. Sounds reasonable, right? Except the IRS didn't clearly define what "determine and document" actually means.

Do you need contemporaneous documentation? Can you rely on past determinations? What level of detail is required? The notice doesn't say. And that's a problem when penalties are on the line.

What the AICPA Is Asking For

The AICPA's comment letter to Treasury makes three key requests:

• Clarify or eliminate the "determine and document" requirement. If it stays, define exactly what it means.

• Provide a safe harbor. Give practitioners a clear, simple test they can rely on.

• Allow reasonable reliance on prior determinations. Don't force taxpayers to start from scratch every year.

The letter also points out that many taxpayers have been capitalizing R&E expenditures since 2022 without this added documentation burden. Imposing it retroactively creates chaos.

Why This Matters for Your Practice

If you have clients in software development, biotech, manufacturing, or any industry with R&E activities, Section 174 is already complicated. Notice 2025-75 made it worse without adding clarity.

The AICPA's pushback gives Treasury a chance to course-correct before final regulations drop. But until that happens, you're stuck in limbo.

What You Should Do Now

Document everything. Even if the "determine and document" requirement is ambiguous, having contemporaneous records is always better than trying to reconstruct your analysis later.

Track the AICPA's advocacy efforts. If Treasury listens, you'll see updated guidance that makes compliance easier. If they don't, at least you'll know what fight is coming.

And if you have clients pushing back on the documentation burden, you can now point to the AICPA and say, "We're not the only ones who think this is unworkable."

The Bigger Picture

This is a perfect example of why practitioner feedback matters. The IRS writes rules in a vacuum. Practitioners deal with them in the real world. When those two things don't align, someone needs to speak up.

The AICPA is doing that. They're not just complaining — they're offering specific solutions. Safe harbors. Clear definitions. Practical guidance that actually works.

Now it's up to Treasury to listen.

Bottom line: Section 174 compliance is already complex. Notice 2025-75 added confusion without clarity. The AICPA is pushing back hard. Document your R&E determinations carefully while you wait for Treasury to respond.