The temporary repairs regulations, which were issued last December, will affect many businesses, regardless of what industry they cater to. Businesses have until the end of the 2013 tax year to file for a Form 3115, “Application for Change In Accounting Method,” to comply with the new complex and lengthy regulations. At the recent ABA Tax Conference, Sunita Lough, Acting Director (prefilling and technical guidance) of the IRS Large Business and International Division, provided some insight on the new regulations filing timeline. She indicated that taxpayers, who choose not to file Form 3115 in order to comply with the temporary tangible property regulations during the first year of the two year window, will not be at risk for an IRS audit as long as they do file before the end of the two years. This means that it is important for all affected businesses to file Form 3115 at some point during this two year window.
As we indicated, the new repair regulations are very complex. We suggest that all businesses should review their repair and capitalization procedures to determine if they currently comply with the new regulation or establish what will need to be done in order to comply. If you have any questions, please contact our Tax Department at (781) 407-0300.