• Issue 2015-29 IRS Makes it Easier for Small Businesses to Apply Repair Regulations to 2014 and Future Years WASHINGTON-
    The Internal Revenue Service today made it easier for small business owners to comply with the final tangible property regulations. Requested by many small businesses and tax professionals, the simplified procedure is available beginning with the 2014 return taxpayers are filling out this tax season. The new procedure allows small businesses to change a method of accounting under the final tangible property regulations on a prospective basis for the first taxable year beginning on or after Jan. 1, 2014. Also, the IRS is waiving the requirement to complete and file a Form 3115 for small business taxpayers that choose to use this simplified procedure for 2014. “We are pleased to be able to offer this relief to small business owners and their tax preparers in time for them to take advantage of it on their 2014 return,” said IRS Commissioner John Koskinen. “We carefully reviewed the comments we received and especially appreciate the valuable feedback provided by the professional tax community on this issue.” The new simplified procedure is generally available to small businesses, including sole proprietors, with assets totaling less than $10 million or average annual gross receipts totaling $10 million or less. Details are in Revenue Procedure 2015-20, posted today on IRS.gov. The revenue procedure also requests comment on whether the $500 safe-harbor threshold should be raised for businesses that choose to deduct, rather than capitalize, certain capital expenses.

Now that it’s Tax Time, many small businesses are just now being educated on the recently implemented Tangible Property Regulations by the Internal Revenue Service. This regulation requires every business and rental property owner with materials, supplies, equipment and real estate to change their accounting method and file an eight page Form 3115, Change in Accounting Method and more often than not, multiple Form 3115’s.

This change by the IRS makes it more restrictive to take current tax deductions for materials and supplies that are not used in the year purchased and certain changes to how repairs and similar items were previously deducted. Although Congress gave the authority to the IRS to write these regulations and set limits on Taxpayers, with financial guidelines, the expressed concern was the adoption of the changes regulated by the IRS.

The instructions for the Form 3115 is 20 pages long and is required to be attached to the tax return filed, as well as a separate copy of the form to the IRS in Ogden, Utah. The Tangible Property Regulations are far too complex and burdensome on America’s Small Business and the IRS is requiring the Form 3115 be filed out on every Taxpayer with depreciable property, repairs and maintenance costs or materials and supplies. Compliance to this new regulation will cost the American Taxpayers a great deal more in preparation fees this year and better seek a good professional such as an Enrolled Agent who is knowledgeable about this new law.

A less complex approach would be to attach a statement or election to each tax return that the Taxpayer has adopted the Tangible Property Regulations but we all know the IRS’s motive with this new law is not to simplify anything!

Commissioner Koskinen and every member of Congress needs to hear your voice now before it is too late. Go to http://www.contactingthecongress.org and click on your state to find your Representatives. You can email the IRS Commissioner at John.A.Koskinen@irs.gov.