State CPA Societies Increase Pressure on IRS to Modify Repair Regulations

November 20, 2014

IRS signState CPA societies are writing to Internal Revenue Service (IRS) Commissioner John Koskinen to urge him to take immediate action to alleviate the burdensome requirements imposed by the tangible property regulations, commonly referred to as the “repair regulations.” 

The repair regulations (T.D. 9636) currently require many businesses to reexamine repair and maintenance expenses and other costs associated with tangible property purchased in prior years.  The analysis is extremely difficult or almost impossible when the records no longer exist.  Compliance with the repair regulations imposes a constraint to small businesses’ daily operations without providing an offsetting benefit to tax administration.

Many state CPA societies have already reached out to their state IRS field offices on behalf of their members and the clients they serve, but the IRS has not provided small businesses any additional relief. 

The state CPA societies and the American Institute of CPAs (AICPA) have been asking the IRS over the last year to 1) make the repair regulations prospective as opposed to requiring businesses to analyze prior year returns and 2) increase the de minimis safe harbor threshold to $2,500 so it covers more small-dollar, relatively minor purchases.  Both changes would immediately and effectively provide relief to small businesses and to their CPAs.

Voices from Capitol Hill

In a related action, Representatives Tom Rice (R-S.C.) and Patrick Murphy (D-Fla.) on October 23 wrote to Commissioner Koskinen about the importance of providing tax relief to small businesses. 

“We are deeply concerned that the rules impose a significant burden on small businesses to comply with these regulations,” they wrote.  “We urge you to act now to provide appropriate relief for these businesses.”

They explained that the nearly 300 pages of technical income tax regulations and more than 200 pages of related guidance mean that most business owners need professional help to comply with the regulations.  “Many taxpayers in our districts have indicated that the cost of adopting the rules could easily double (or even triple) their annual tax return preparation costs,” Rice and Murphy wrote.  They “simply do not have extra resources to dedicate to administrative and income tax compliance matters.”

For more information about the AICPA’s efforts to obtain IRS relief for small businesses, read the story in the October issue of The CPA Advocate.