IRS Delays Tangible Property Regulations


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IRS Delays Tangible Property Regulations

Perhaps with the spirit of Thanksgiving in mind, the IRS last week issued Notice 2012-73, which delays the effective date of its new tangible property regulations by two years. The IRS recognized the complexity and effort required to implement the tangible property regulations and gave taxpayers more time to fully assess their impact on everyday transactions.

Now the regulations will apply to tax years beginning on or after January 1, 2014, with early adoption permitted for tax years beginning on or after January 1, 2012. This delay gives business owners time to not only assess the impact of the new regulations but also develop an implementation plan for compliance before they become effective. The early adoption option for 2012 gives taxpayers a unique opportunity to take advantage of the favorable aspects found in the new rules while delaying the unfavorable aspects. Essentially, taxpayers can enjoy the best of both worlds until 2014.

The new tangible property regulations were originally issued in temporary form on December 23, 2011. Last week’s notice states that the IRS expects to issue final regulations sometime in 2013 and that certain sections of the regulations may be revised in a manner that may affect, and in some cases simplify, a taxpayer’s implementation of the rules. These sections relate to the de minimis rule, the rules governing dispositions, and the routine maintenance safe harbor.

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It’s important to make the most of this delay by proactively assessing the impact of the rules now and creating an effective implementation plan to reduce disruptions to your business when the rules eventually become effective.

The tax professionals at Moss Adams LLP can help you assess your current state of compliance and create an implementation plan that works for your needs. Please contact us to get started.

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