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IRS Changes Offer Relief For Small Business Owners

Taxes can be irritating, even at the best of times. Whatever views you might have about taxation and giving money to the government, the simple fact of taxes is that (other than that they are unavoidable without suffering legal repercussions) they nearly always involve a huge pile of difficult, confusing, and tedious forms and paperwork. Fortunately, things seem to be swinging in favor of small business owners in 2015. After the wide criticism received by a piece of legislation introduced into last year's tax cycle, changes have been made for 2015's fiscal year that promise to alleviate some of the stress and complexity for small business owners trying to sort through their taxes.

Original IRS repair regulations from 2013

At the end of 2013, the IRS implemented a repair regulation, specifically for small business owners (defined for their purposes as a company that makes less that 10 million dollars annually.) This legislation centered around a tax form called form 3115. The form's intended use was to report a change in accounting methods. What makes this form important is that, without filing it, any changes in accounting methods are illegal and businesses operating with unapproved methods could be fined a hefty amount. The problem with the form is that the language of the form requires that any change in method or procedure is reported – even if it comes from the IRS themselves and not from an internal change in accounting method. For this reason (and several others having to do with how the form was filed and responded to) the form and the legislation behind it were heavily criticized.

Accountants criticize lengthy requirements

The biggest criticisms that form 3115 faced were in how it affected small business owners. Without accounting departments to sort through the IRS's changes or any significant infrastructure for dealing with and keeping abreast of legislation changes, small businesses were the most likely to be affected by the form. The long, confusing forms, the inefficiency with which they were handled by the IRS, and the significant threat to businesses by mishandled forms were all reasons that, in 2015, the IRS decided to change its procedures for form 3115.

New procedure

The basis of the new procedure is a modification of Revenue Procedure 2015-14 into Revenue Procedure 2015-20. In simple terms, this procedure allows small business owners (again, companies with annual profit of 10 million dollars or less) to not report small changes in operating procedures, accounting methods, and location. Furthermore, it allows small businesses created on or after January 1st 2015 to make significant changes in the same categories without filing a form 3115. These changes, among several other more obscure ones, greatly simplify the process of reporting changes in business practices to the IRS. This is great news for small business owners as tax deadlines quickly approach. Now you can focus some of that saved time toward, bettering your business.


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