2015 TAX IMPLICATIONS FOR ALL CLIENTS
As you may be aware, the IRS has implemented new regulations surrounding the ownership of so-called “tangible property.” These regulations will affect every business and rental property and require that Form 3115, “Application for Change in Accounting Method,” be filed to indicate that you will follow these regulations and change your method of accounting to comply with the new rules.
These regulations have created a great deal of confusion in every corner of the taxpaying world — among taxpayers like you, among folks like us who prepare tax returns, and among our professional associations, which monitor regulations and help us understand them.
We are trying to clarify these regulations as quickly as possible. We are working closely with the Maryland Association of CPAs, the American Institute of CPAs, and the IRS to get answers to the questions surrounding these rules. In addition, the IRS is working on a list of frequently asked questions that might provide some clarity, although we do not know when those FAQs will be available.
In the meantime, we would like you to be aware that these new regulations could potentially add additional time and costs to the preparation of your tax return. We will do our best to minimize these additional costs, but we thought it would be fair to warn you about them ahead of time.
We have worked hard to calculate a cost for Form 3115 as low as we reasonably can for small business owners and rental property owners. If you have multiple business entities, you will need to file a separate Form 3115 for each entity. Rental property owners who have multiple properties do not need to file a separate form for each property. We think that there will be an increase of $500.00 per form.
For businesses that are larger and more involved or have larger fixed assets (depreciation schedules), additional hourly rates could be incurred if more computations or consultations are required. If this pertains to you, we will contact you before we complete any additional work and incur related charges.
These requirements and lack of direction by the IRS could extend the time to prepare your taxes. We will keep you informed.
We will let you know as soon as we have further guidance on these confusing regulations. In the meantime, we thank you for your patience and continued business. Please don’t hesitate to contact us with any questions you may have.
The CFO Source LLC, Partner
RAF Consulting Inc, President