Page 38 - ATR 1 2014 web

they use unaccredited tax professionals.
The tax preparation industry has been
highly unregulated with a large number
of preparers who are not accountants,
attorneys or enrolled agents. Last year,
the nation’s fourth largest tax prepa-
“theY will haVe higher taxes aNd more ration business, Instant Tax Service,
regulatioNs that theY haVe to trY to was ordered closed by a federal judge
NaVigate. plaNNiNg Now will saVe carriers because of false and deceptive practices.
For the IRS, it’s easier to police the
aNd other compaNies’ moNeY aNd headaches iN nation’s accountants than to monitor
the future.” businesses of every kind, which is why
this change is occurring. When deal-
ing with an accountant, the IRS has the
—richard bell, leverage of removing licenses and taking
presideNt, away a professional’s right to practice
bell & compaNY, p.a. before the agency.

Bell said one of the challenges is
that the IRS is becoming increasingly
reliant on automation rather than a
network of regional offices where prob-
lems can be solved taxpayer by taxpayer.
According to Espejo, carriers won’t rule. But Congress did not extend the A good tax professional maintains a
necessarily pay more in taxes over the law, so now businesses can only deduct relationship with the IRS representatives
life of the tractor. “Over the life of the $25,000. At $225,000 in purchases no and can work through challenges before
asset, you’re going to take the same section 179 deduction is allowed. they become problematic.
amount of depreciation, and if you The IRS published final guidance Changes in another area – health
look at it from year over year, your tax regarding deduction and capitalization care – are coming, but the biggest
deduction is greater in the first year and of expenditures related to tangible prop- changes will come after 2014. Most
less over the remaining years under the erty on September 19, 2013. A company small businesses have less than 50
2013 rules. With the 2014 rules that are that buys assets costing $5,000 or less employees and are not required to pro-
now in place, the depreciation is spread can write off each individual asset as vide health insurance, and those that do
based on percentage tables published long as the firm hires an outside audi- were able to grandfather their previous
by the IRS over a four-year period. tor to audit its statement. Without that plans. He expects more movement in
Basically, you’re going to take $130,000 audited statement, the eligible purchase 2015 and 2016.
depreciation any way you look at it.” amounts drop to $500. The regulation What does this mean for carriers
Espejo added that whether a carrier assumes complying with the regulation in the coming years? It could mean a
actually pays more in taxes depends on will require about 15 minutes per entity, challenging tax and regulatory envi-
its tax bracket over the life of the asset. but Bell said he had spent several hours ronment for small carriers. For a small
Another change involving Section studying it at the time he was inter- company making a decent profit, the
179 rules will reduce the amount that viewed by Arkansas Trucking Report. burden can be heavy. Bell said the regu-
businesses can deduct for both new and “They’re rewarding you for stepping latory environment is contributing to
used purchases from $500,000 to only up your game and having your finan- the industry’s consolidation, creating
$25,000. The American Taxpayer Relief cial statements audited, and the IRS is fewer, larger carriers. Companies of all
Act of 2012 allowed carriers and other giving you a tax benefit because they’ll types – and not just carriers – could be
businesses during 2012 and 2013 to let you write off an asset quicker.” Bell faced with the need for more staffing
deduct half a million dollars of personal said. to handle their regulatory and adminis-
property assets as long as the carrier Bell said that the U.S. tax system trative responsibilities. “They will have
did not purchase more than $2 mil- depends a lot on the “honor system” higher taxes and more regulations that
lion of assets in a given tax year. At $2 for compliance. Most American com- they have to try to navigate.” he said.
million, the amount of the deduction panies make every effort to comply and “Planning now will save carriers and
was reduced dollar for dollar, so that a largely succeed at being law-abiding other companies’ money and headaches
carrier that spent $2.5 million would corporate citizens. But not everyone in the future.”
not be able to take advantage of the gets the appropriate guidance when

38 arKansas trucKing report | issue 1 2014