Friday February 13, 2015 delivered an updated revenue procedure from the IRS that will reduce the reporting requirement burden for many taxpayers. (See our previous blog post on this topic here)
Revenue Procedure 2015-20 has modified Revenue Procedure 2015-14 and will allow small taxpayers to adopt the repair regulations in 2014 without the filing requirement of a Form 3115. According to the updated Rev. Proc., a small business taxpayer is defined as a business with total assets of less than $10 million or average annual gross receipts of $10 million or less for the prior three taxable years.
The change in procedure for these taxpayers is likely a reaction by the IRS to the comments received from taxpayers and tax practitioners. For many taxpayers, the requirement to file a Form 3115 seemed like an unnecessary burden to be in compliance with the repair regulations. The Service had taken this feedback into consideration and modified the reporting requirements. However, the filing of a 3115 to adopt the repair regulations is still acceptable and there should be no concern if these were previously filed for these method changes.
All taxpayers should still consider the repair regulations as a vital part of their 2014 tax compliance. There are several annual elections, such as the De Minimis Safe-Harbor, that many taxpayers will want to include with their filings, regardless of whether they are considered a small business. Furthermore, not all taxpayers will fit the IRS’s definition of a small business and are still required to file the Form 3115 to adopt the repair regulations.
Barnes Dennig offers a comprehensive review of tax liabilities and methodologies that could help you identify compliance needs. Contact us here in advance of the filing deadlines to be sure that all of your information is assembled.