Last Friday, if you thought you heard a combination cheer and moan go up from CPA offices around the country, you weren’t dreaming. Rather, it was in reaction to an announcement from the IRS that it was providing some relief for small businesses from the reporting requirements related to the final tangible property regulations.
The simplified procedure announced by the IRS is available beginning with the 2014 return taxpayers are filling out this tax season. (The moans you heard came from CPAs who had already completed those returns!) 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.
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 on IRS.gov. Also, the IRS is waiving the requirement to complete and file a Form 3115 for small business taxpayers who 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 when the IRS made its announcement. “We carefully reviewed the comments we received and especially appreciate the valuable feedback provided by the professional tax community on this issue.”
The “professional tax community” the Commissioner is referring to includes TSCPA, AICPA and other state CPA societies; they had all written to the commissioner urging the IRS to consider providing relief to small businesses on these repair regulations. TSCPA’s Federal Tax Policy Committee also issued comment letters to the IRS in 2012 and 2013 on the onerous regulations. So the effort to seek this relief had been going on for quite a while within the profession.
It demonstrates one of the values of having an organized professional association that advocates and works on behalf of its members on legislative and regulatory issues. Perhaps the IRS would have seen the light eventually, just based on general complaints from individual CPAs and small businesses, but I would not assume that to be the case. The late Senator Everett Dirksen was famous for saying, “When I feel the heat, I see the light.” In this case, TSCPA and the rest of the organized profession supplied the heat to help the IRS see the light on this issue.
While it would have been preferable to get this relief a little sooner, before tax season started, late relief is better than none at all. I have certainly been critical of the IRS in the past on a number of other issues, so when they do something positive, I think it is only right to recognize their effort. My thanks for their positive step on this issue. Oh what a relief it is.