IRS: Another Regulatory Agency Out of Control

[WestVirginiaRebel]

Townhall:

As the current administration piles pounds of regulations on the American public through uncontrolled executive branch agencies, most of us watch this impervious to their actions unless it directly affects our daily lives. This year the IRS changed the rules regarding deduction of repairs, maintenance, and supplies, tormenting the tax-preparation community and eventually saddling owners of businesses and rental properties with extra cost in their tax preparation. If you are not a business owner or a rental owner, you will end up paying as well through increased costs or rents.

 

The IRS decided that the rules regarding deduction of repairs and maintenance or supplies needed clarification. The main reason gets down to the fact they want people to capitalize more expenditures and expense them over a period of time as opposed to in the year of purchase. That would create more revenue for the government. This is something the Congress should really be deciding; unfortunately, as with many laws, the IRS (like other agencies -- FDA,FCC, SEC and EPA) decides what they want to do without legislative oversight.

 

This would not be such a big deal except the IRS has made this as onerous a change as ever done. It goes way beyond just learning the rules and applying them. There is the reality of how to implement the new rules and what to file with the IRS.

 

I have a group of colleagues that banded together to determine a path to address these rules for our clients. After the changes were addressed in our annual continuing education classes, we still did not have enough information so we designated our most technically-skilled colleague to take a three-hour seminar addressing only this issue. We also hired a special master to consult us on the law and how to comply. We have a two-inch stack of articles on proper implementation of these new rules. My colleague and I spent about a week each of our time determining a path to make sure we are properly complying with the rules.

 

The upshot is we have to comply in two ways. The first is to determine which of three elections are applicable to each client and make those elections on this year’s returns and possibly future years. The second is we determined that we need to file either two or three (9-page) forms to be attached to each tax return that has a business or rental property and owns or uses tangible personal property. For individuals who have their own small business and maybe are renting a condo that they own from before they bought their current house, we will have to file six of these nine-page forms (54 pages) with their tax return. Each one of these nine-page forms needs to be separately signed and mailed to an IRS center. The experts who communicated with the IRS about this say they are expecting 40 million of these forms. In the past, when the IRS has made similar type rule changes, they have not required taxpayers to file these special forms.

 

Unlike the burdensome new Obamacare tax provisions, there are no new personnel to handle this deluge. Despite my prior statement that they would be adding 16,000 agents to handle Obamacare matters, it appears they are only shifting personnel out of other operations to confront the confusion. In the meantime, Congress has cut the IRS budget due to their blatant political activities regarding the actions of Lois Lerner and her gang. Though the budget cuts are only about 4 percent of the IRS budget, the agency is acting like Armageddon has befallen them and cutting only customer service. The IRS Commissioner, Koskinen, who is nothing more than a political hack whined to Congress this week. This is how government agencies answer budget cuts: we are not going to operate more efficiently; rather we are going to make the people suffer until we are given more and more and more money.

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Infernal Revenue.