IRS Raises Tangible Property Expensing Threshold

The IRS simplified the paperwork and recordkeeping requirements for small businesses by raising the safe harbor threshold for deducting certain capital items from $500 to $2,500. The change affects businesses that do not maintain an applicable financial statement (audited financial statement). It applies to amounts spent to acquire, produce or improve tangible property that would normally qualify as a capital item.

The new $2,500 threshold applies to any such item substantiated by an invoice. As a result, small businesses will be able to immediately deduct many expenditures that would otherwise need to be spread over a period of years through annual depreciation deductions. The new $2,500 threshold takes effect starting with tax year 2016. In addition, the IRS will provide audit protection to eligible businesses by not challenging use of the new $2,500 threshold in tax years prior to 2016.

For taxpayers with an applicable financial statement, the de minimis or small-dollar threshold remains $5,000. For more information, please refer to IR-2015-133 and Notice 2015-82.

New Steps to Help the Public Protect Personal Tax Data

For the 2016 filing season, there will be new standards for logging onto all tax software products, such as minimum password requirements, new security questions and standard lockout features. The software industry will provide more than 20 additional data elements from the tax return submission to the IRS and, in turn, to the states to help identity fraudulent returns. All parties agreed to information sharing on a weekly basis to help quickly identify and adjust to new and emerging tax-related fraud schemes.

The IRS has also released IRS Security Awareness Tax Tip Number 1 that covers Seven Tips to Protect Your Computer Online.

E-Services Phishing Scam

The IRS sent out an alert that an email is being issued to tax preparers asking them to update their e-services information. This email WAS NOT generated by e-Services. The links provided in the email to access e-Services appear to be a phishing scam to capture e-Services usernames and passwords.

If you receive an email like this, do not click on the links or take any other action. There is no need to call us or the IRS. Simply disregard the email.

Guidance to Simplify ABLE Program Administration

The IRS announced three changes to the proposed rules for new tax-favored Achieving a Better Life Experience (ABLE) accounts for eligible disabled individuals that will be included in the final regulations when issued. These changes will make it easier for states to offer and administer ABLE programs.

Notice 2015-81 fully describes these changes. They include:

  • Categorization of distributions not required.

  • Contributors’ TINs not required.

  • Disability diagnosis certification permitted.

Until the final regulations are issued, taxpayers may rely on the guidance in Notice 2015-81.

IRS Upgrades, Enhances FATCA Registration System

The IRS has upgraded the Foreign Account Tax Compliance Act (FATCA) Online Registration System, enabling sponsoring entities to register their sponsored entities to obtain a global intermediary identification number. The upgraded system also will allow users to update their information, download registration tables and change their financial institution type. The upgrade also includes an updated jurisdiction list.

Additional information can be found in IR-2015-131.

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