Tax Compliance Alert Effecting Tangible Property Regulations

Tax Compliance Alert: The IRS Streamlines The Methodology For Small Businesses To Comply With The Tangible Property Regulations

As a tax compliance reminder for calendar year end partnership entity tax returns due on April 15th, The Internal Revenue Service (hereinafter the “Service”) recently streamlined the methodology for small business owners to comply with the Final Treasury Regulations (hereinafter the “regulations”) governing Tangible Property with newly released administrative authority on February 13th of 2015.

Revenue Procedure 2015-20 permits small businesses to change a method of accounting under the regulations on a prospective basis for the first taxable year beginning on or after January 1 of 2014. Moreover, the Service is waiving the arduous requirement to file a Form 3115 entitled “Application for Change in Accounting Method” for small business taxpayers that choose to use this simplified procedure for 2014. Consequently, many small business taxpayers can now waive the filing of Form 3115 and adopt the regulations on a prospective basis. However, as a caveat, the Service indicated that taxpayers will not receive audit protection for prior open statute years.

As set forth under Revenue Procedure 2015-20, 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. For complete details, please consult Revenue Procedure 2015-20 which can be located and referenced at http://www.irs.gov/pub/irs-drop/rp-15-20.pdf

Please contact Peter J. Scalise, Federal Tax Credits & Incentives Practice Leader for Prager Metis CPAs, LLC for a complimentary consultation on how to mitigate tax compliance risk with the new regulations while optimizing opportunities within the new regulations (e.g., identifying partial or full dispositions of structural components within a building envelope resulting from a major remodeling effort; increased granularity in the reporting of I.R.C. § 1250 assets to facilitate future repair and maintenance expensing opportunities by identifying each “Unit of Property” (“UoP”) as well as major components comprising each UoP; etc.).

About the Author
Peter J. Scalise serves as the National Partner-in-Charge of the Federal Tax Credits and Incentives Practice at SAX CPAs LLP. Peter is a highly distinguished member of the Accounting Today Top 100 Influencers and has approximately thirty years of progressive Big 4 and Top 100 public accounting firm experience developing, managing, and leading large scale tax advisory practices on a regional, national, and global level.
Peter also serves as a passionate philanthropist and a member of several Boards of Directors and Boards of Advisors for local, regional, and national charities in connection with poverty and hunger alleviation; economic development; environmental conservation; health and social services; supporting veteran and military service personnel along with preserving arts and cultural programs.

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