Don’t assume that the IRS knows what you’re doing on your tax return because changes in accounting methods aren’t always clearly defined, according to an auditing expert.
Eric P. Wallace, a sole practitioner who has written tax guides for CCH, says that accountants should be aware of the things that are done, “whether they’re right or not.” Doing so would also protect other accounting and tax professionals, he added.
“There is no way for the IRS [to say], ‘Okay, you are a C corporation, you’re over $5 million and you’re reporting on the cash method.’ The IRS still doesn’t have you identified, if you can believe that. They just don’t,” Wallace said, in his session, Key Tax Accounting Method Procedures and Developments: The Toughest Tax Subject, at CCH Connections: User Conference 2017 in San Francisco on Tuesday.
In his presentation Wallace –– who also serves as an advisor to contractors, home builders, and property managers and developers –– addressed some key issues:
- Beyond required method changes, tax practitioners should also adapt client tax methods to the ones that provide the best possible deferrals.
- All industries have to comply with tax method change basics, i.e. the rules and procedures.
Dominic is Deputy Editor of AccountingWEB