TPR Anxiety
With the recent flurry of activity regarding 2014 tax returns and the Section 263(a) Tangibles Regulations (Rev. Proc. 2015-20), I find myself feeling conflicted about what I should be doing … Should I be applying myself to mastering the ins and outs of the new Regulations and the safe harbor that will impact my clients?
Or, should I just put the pedal down and focus on processing clients 2014 tax returns, adding the required Section 263(a) statement where necessary or appropriate, and deal with Forms 3115 later?
I have fleeting thoughts about this example in the Regs or that nuance of the Safe Harbor, but I find that I have to push it all off to chase down a truant K-1 or clarify a December dividend payment. And, this lack of attention to the recent guidance renders me uneasy.
I know a lot of folks have thought about and developed plans for dealing with these changes (and are doing so) – especially if your firm has a “team” or department devoted to the Tangibles Regs. But for the smaller firms or practitioners like myself … where do you put your resources and where do you devote your time?
Have you developed a plan? Are you executing that plan? Or, are you just cranking out the 1040s and extending 1120s with no intention of dealing with the T-Regs after April 15th?
READ MORESleeper Alert! – IRS GLAM Re: Auto Dealer Facility Upgrade
Seemingly out of nowhere, the IRS released Legal Advice on the taxation of auto dealer facility image upgrade payments to dealers. It comes as no surprise that the IRS concluded that these payments are includable in a dealership’s gross income under Section 61.
What comes as somewhat a surprise – at least to me – is that out of all the CPAs I know, none have told me about any ongoing audits where this issue has been raised. Has an IRS agent mentioned this in any of your auto dealership audits yet?
Significantly, this guidance from the IRS has no precedential value … but it certainly lets us know what to expect.
If a dealership has not already filed its tax return for 2013, this holding from the IRS should be considered for its implications both for the dealership and for the CPA signing the return as preparer.
Be forewarned, there is a huge “sleeper” in this GLAM that could result in penalties if payments under certain Factory plans are not properly accounted for.
This GLAM is dated April 7, but was just released yesterday (May 15, 2014).
Full text of the GLAM
READ MOREThe Sequester – Lemons Or Lemonade
One of the benefits of being at the AICPA Auto Dealership Conference is the opportunity to catch up and talk shop with many friends. While talking about how some in the press have been lamenting the fact that the IRS has been “closed” for a few days – that calls for answers to questions are not being taken, refunds can’t be processed, etc. – one sharp-minded colleague pointed out that every day that the IRS auditors aren’t working effectively shortens the statute of limitations by one day. Given the amount of time it takes the IRS to do the usual paperwork, that means one less day poking around in the details. There … Lemonade out of lemons.
READ MOREThe Final Tangibles Regulations: Expense Or Capitalize? … At A Glance
I’ve seen a lot of summaries on the new / Final Tangibles Regulations that were published yesterday in the Federal Register. They all seem to basically just repeat the overview of the Regs that appeared in the Register. Here’s a link to a brief, 2-page At a Glance summary that I put together. Hopefully, it’s a little easier to get through than some of the summaries out there.
READ MOREThe “PCORI” Fee
The effective date for the employer mandate under ACA has been postponed to Jan. 1, 2015. Somewhat related to all of this is the requirement that employers must pay a $1 per head excise tax … the so-called “PCORI fee.” This payment is due by July 31, 2013.
I can’t find anything issued by the IRS so far to indicate that there has been a corresponding or similar postponement of the filing date for the payment of the PCORI fee. So far, the blogs I’ve seen have not cleared this up.
Does anyone have any solid information on this?
READ MOREAbsence Makes The Mind Wonder
The absence of the IRS Motor Vehicle Tax Advisor from NADA Convention in Orlando last weekend is certainly puzzling. Does it reflect a lack of interest on the part of the IRS on interacting with dealers and their CPAs?
Over the years, there have been so many times when the IRS overreacted to perceived abuses of the tax system by dealers (remember the “scare” over PORCs that fizzled after a few TAMs?). Oh, and of course, we spent 7 or 8 years fooling around with Section 263A before the IRS softened up with safe harbors. And, that reminds me, do you even recall the brouhaha over the use of replacement cost by dealers for valuing parts inventories instead of using actual cost? (That, of course, was not laid to rest until after the IRS convinced the Tax Court it was right and then realized the entire industry was using replacement cost because it was impossible to determine actual cost.)
As some of you know, I could go on and on. But the real question seems to be, wouldn’t it make sense for the IRS to put itself in a position to be better informed – sooner rather than later – on what’s going on in the industry and some of the consequent tax issues that CPAs have to deal with on a regular basis?
The absence of the MVTA was, in my opinion, a “lose-lose” situation.
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