The Internal Revenue Service (hereinafter “IRS”; or “the Service”) recently issued on September 14th of 2016 an Audit Techniques Guide (hereinafter “ATG”) governing Tangible Property Regulations Compliance (hereinafter “TPR Compliance”).
As a synopsis, an ATG provides a meaningful framework for IRS examiners during audits by providing insight into tax issues and accounting methods unique to specific industries. While ATGs are issued to provide administrative guidance for IRS employees, they’re also highly pragmatic frameworks for tax professionals in assessing sustainable tax return filing positions while mitigating tax compliance risk.
This new ATG has been released as the Service prepares for a considerable number of anticipated new audits to commence before the calendar year-end in connection to assessing taxpayer’s TPR Compliance. As a Best Practice, tax professionals who have implemented a change in accounting method to re-characterize the tax treatment of tangible property (e.g., capitalize vs. deduct) should be aware of the issues within this ATG and how potential audits may be structured and its effect on a client’s tax return and financial statements (i.e., The Accounting for Income Taxes treatment under ASC 740 and FIN 48).
Please contact Peter J. Scalise, Federal Tax Credits & Incentives Practice Leader for PM Business Advisors for a complimentary consultation to discuss the scope and application of this new ATG governing TPR Compliance and its potential impact on your client’s tax returns and financial statements. Peter can be reached at 212-835-2218 or at pscalise@pmba.com.
A copy of this newly issued ATG governing TPR Compliance can be accessed here.