Form 3115

[August @ ADG Financial]

Haven't seen this yet, but got this today from the NSA.

The IRS has heard us.

The IRS has reacted to the complaints of the small business community and today issued Revenue Procedure 2015-20 outlining a simplified procedure for small businesses to comply with the final tangible property regulations. 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; and
waives 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. A copy of Revenue Procedure 2015-20 has been posted on the NSA website and is also attached to this message.

Please note: the revenue procedure also requests comments on whether the $500 safe-harbor threshold should be raised for businesses that choose to deduct, rather than capitalize, certain capital expenses. I am sure NSA will provide comments.

A special thanks to the NSA Federal Taxation Committee for their efforts in providing comments to the IRS on the need to clarify the tangible property regulations.


Thanks,

NSA Staff
members@nsacct.org
800-966-6679

[mammondee]

"and waives the requirement to complete and file a Form 3115 for small business taxpayers that choose to use this simplified procedure for 2014. "

Exactly how do we indicate we are wanting to get in on this "simplified procedure"?

Does this cover for the $500 safe harbor repair and maintenance?

[Lion]

You simply prepare the 2014 return to comply with the new repair regs.

Also, you may file any appropriate annual elections.

You lose audit protection/safe harbors for prior years, but you don't have to scrub the depreciation schedule nor examine supplies/materials/repairs from prior years.

Carefully consider each client on a case-by-case basis.

[ATSMAN]

I stopped scrubbing my database after RP 15-20 was published. Move on with the new regulations prospectively and I don't think IRS has the manpower to audit old returns for violations of 3115 for small business taxpayers. Their budget has been cut and with ACA workload they are barely struggling to stay afloat.

[Lion]

I'm sure the IRS doesn't have the manpower to look at every return.

But, I can look at each of my clients. It might be to their advantage to use the new regs retroactively. Facts & circumstances.

[Burke]

My question is: do we still have to have the non-AFAS statement in effect at the beginning of the year and should we monitor to see that those are completed and on file?

[Lion]

The client is supposed to elect before the year begins. But, I'm not auditing my clients. If they tell me they decided to not depreciate anything under $500 while drinking champagne on New Year's Eve, I will take them at their word -- if that and their other statements to me sound reasonable. (There are clients who I make convince me or they don't qualify. The miles on my ceiling, for instance, I ask them for their mileage log.) I don't remember seeing that their election has to be written. I am probably adding something for them to sign for me, though.

[ATSMAN]

Just to CMA, I am e-mailing a copy of RP 15-20 and a summary of it to my clients who may be impacted and tell them in a nut shell what they need to do. I will deal with it after the tax season in more depth! Don't have the time right now to scrub my fixed asset manager.