IRS Notice 2015-82 – Safe Harbor Limit
The IRS has just released Notice 2015-82 that increases the de minimis safe harbor limit without an Applicable Financial Statement from $500 per invoice or per item as substantiated by an invoice to $2,500 per invoice or per item as substantiated by an invoice. The effective date of the Notice is for costs incurred on or after January 1, 2016. The IRS is providing audit protection and they will not challenge the $2,500 threshold for application in earlier years as long as the taxpayer satisfies the safe harbor requirements. Therefore, taxpayers should update their accounting policies and procedures for the change.
This will allow taxpayers to expense, in the year purchased, small equipment and materials purchased that would otherwise have to be capitalized. This doesn’t affect the deductibility of repairs and maintenance costs that the taxpayer may incur.
The threshold for taxpayers with an applicable financial statement remains the same at $5,000 per invoice or per item as substantiated by an invoice.