Breaking: AICPA Says Help Might Be On The Way

This post was originally published on Forbes Feb 10th, 2015

The American Institute Of Certified Public Accountants (AICPA) has finally responded to the anguished cries of the bulk of its membership that the implementation of the new tangible property regulations (or repair regs as we call them), marvelous as it was for the profits of larger firms, is creating a nightmare for tax preparers who have to crank out returns for people without deep pockets.  According to the OMB notice that goes with Form 3115, it takes on average 80 hours to prepare.  There is one body of thought that holds that every business return, including a modest Schedule C, requires a From 3115 this year. Besides being attached to the return, Form 3115 has to be separately mailed to Ogden Utah. Of course that 80 hours will get pared way down as routine forms are done in bulk, but still it seems like quite a pain particularly when ACA compliance is also kicking in this year.

The only thing that I find really encouraging about the AICPA announcement is that I can show it to my partners and justify my wait and see approach, which now apparently has the imprimatur of the AICPA. Here is the announcement.

We are reaching out to members to address issues and concerns with the tangible property “repair” regulations. Over the last few weeks, we have heard from an unprecedented number of members with questions, concerns and requests for resources. The two biggest questions we are hearing are: Will the IRS be issuing guidance or relief? What should we do right now?

What is the Status of IRS Guidance or Relief?

We understand that the IRS and Treasury are considering our recommendations to provide relief from the reporting requirements related to the repair regulations. We are hopeful they will release some form of relief for small businesses in the next couple of weeks. We understand that time is of the essence. If any relief is granted or if the IRS releases additional information, we will notify members immediately.

Our advocacy efforts on this issue date back to the release of the proposed regulations. Since that time, the AICPA Tax Executive Committee and the Tax Methods and Periods Technical Resource Panel have continued to provide comments and feedback to Treasury and the IRS to express our concerns about the administrative burdens associated with the regulations and request relief on behalf of members and small businesses. We have asked for the following forms of relief:

• Make Form 3115, as well as the section 481 adjustment, optional.
• Allow for the adoption of a “cut-off method” and apply the rules prospectively.
• Accept a statement in lieu of Form 3115 to acknowledge compliance with the regulations.
• Raise the de minimis safe harbor from $500 to $2,500.

What Should We Do Right Now?

We find ourselves in a challenging predicament. On the one hand, we are hopeful that the IRS will issue relief which would ease the burden for small businesses. On the other hand, there is no guarantee that relief will come in time (if at all). As we move further into tax season, tensions continue to mount as rumors spread regarding what the IRS may or may not provide in terms of guidance, relief, support or enforcement. We have heard that many practitioners are deferring the preparation of Form 3115 in anticipation of possible relief. For members struggling with the question of what to do right now, there are only two options to consider:

• Option 1: Continue under current rules and adapt if/when the IRS issues relief. The risk with this option is that work performed today may need to be revised or may prove obsolete. So, members who choose this option should consider their capacity to perform work that ultimately may not be necessary and potentially not billable.
• Option 2: Temporarily suspend all related work in hopes of near-term the IRS relief. The risk with this option is that the IRS may not issue relief at all. So, members who choose this option should consider their broader workload and that certain returns may need to be extended.

We cannot formally advise members to disregard existing law and regulations and simply not comply. Ultimately, firms must make an informed decision based on their unique circumstances, client mix, and resources.

That actually happens to work for me.

Thanks AICPA nice to see my dues money at work.

I’m still thinking about taking the Enrolled Agent exam and packing it in, but I don’t know that they have been doing much better either.