James W. Rahmlow, The Daily Record Newswire
The IRS has issued the final “Repair” regs that deal with the treatment of costs to acquire, produce or improve tangible personal property and whether such costs can be capitalized or currently deducted. The final regs replace the temporary and proposed regs issued in December 2011 and the IRS has a goal to have the regs effective on Jan. 1, 2014.
The final regs made significant modifications to the proposed regs including changes in the following categories: materials and supplies, improvements, routine maintenance, de minimis safe harbor and capitalization election. This project has been a long time coming with the goal of the IRS being to have taxpayers bring a consistency of application to the concept of capitalization versus expensing of these costs.
October 2013 Applicable Federal Rates
In Revenue Ruling 2013-21, the IRS issued both its Applicable Federal Rates and Adjusted AFRs for to be used for October 2013 transactions.
The rates represent a modest increase from the September 2013 rates.
IRS acknowledges penalty notices issued in error
The IRS recently announced that it had issued erroneous CP 283C Notice of Balance due for Incomplete/Late Penalties related to their Form 8955-SSA, Annual Regis-tration Statement Identifying Separated Participants with Deferred Vested Benefits. The notices approximated 4,000, and were sent to plan sponsors. If you received the notice (variously dated between July 28 and August 26, 2013) the IRS will abate any penalties.
IRS issues fourth quarter over and underpayments interest rates
Keeping rates unchanged from the third quarter of 2013, the IRS issued its fourth quarter rates for overpayments and underpayments of tax for the 2013 quarter beginning Oct. 1. For corporations, the overpayment rate is 2 percent except that it is 0.5 percent for corporate overpayments exceeding $10,000. Corporate underpayments are 3 percent with the rate increasing to 5 percent for corporate overpayments considered “large.” Individuals will receive 3 percent for overpayments and will pay 3 percent for underpayments.
Access legislation
This column is usually devoted to “recently effected” as opposed to “proposed” legislation, but I thought that a recent piece of proposed legislation warrants a mention. Recently Sen. Lamar Alexander and Rep. Stephen Fincher, both R-Tenn., announced plans to introduce legislation requiring the IRS to notify taxpayers whenever the agency accesses their tax returns.
The proposed legislation is to be called the IRS Abuse Protection Bill and would require disclosure of who accessed the information, the purpose of such access and how the information was accessed. Additionally, taxpayers would receive a copy of the information accessed and any report (if issued) on how the information was used. I will update you on this potentially far-reaching proposed legislation.
Guidance issued for tax treatment of married same-sex couples
In Revenue Ruling 2013-17, the IRS recently issued guidance for Same-Sex Couples, which adopted for federal income tax purposes a rule that recognizes that the same-sex marriage is valid in the jurisdiction where it was entered, regardless of the couple’s place of domicile.
The guidance is the result of a June 2013 Supreme Court ruling and clarifies that the same sex couple will be treated as married for all federal tax purposes, including income, gift and estate taxes. The ruling is effective for the 2013 tax year. Additionally, the IRS posted on its website a section in the frequently asked questions section that attempts to answer the most common questions.
Increased IRS fees for 2014
In proposed regulations, the IRS recently announced that it will increase the user fees charged for two taxpayer applications. For taxpayers applying for installment agreements, the current charge is $105 per agreement. This fee is being doubled to $282 although discounts are available for taxpayers who enter into a direct debt agreement and for low-income taxpayers. For taxpayers apply for an Offer in Compromise, the user fee will be increased to $186 from $150, with no fee imposed on low-income taxpayers.
Another E-File requirement
Under proposed regulations, a plan administrator who is required more than 250 employee Retirement Benefit Plan Statements/Returns per year would be required to electronically file such returns, statements and forms. The legislation is for plan years that begin on or after Jan. 1, 2014, and applies to returns and reports required to be filed under Code Secs. 6057-6059.
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James W. Rahmlow, a certified public accountant, is a partner with Mengel, Metzger, Barr & Co. He can be contacted at jrahmlow@mmb-co.com.
