IRS And Treasury Select Key Retailers’ Tax Issue For Industry Issue Resolution Program

In November 2012, the IRS and the Treasury Department announced they had accepted a request from the National Retail Federation and Retail Industry Leaders Association for guidance under the IRS's Industry Issue Resolution program regarding capitalization versus repair issues.

The submission included a request to deal with (1) application of unit of property, (2) repair and remodeling expenses and (3) rules for general maintenance and repair expenses.

The changes in the repair regulations will particularly affect retail industry taxpayers because they typically incur a significant cost to store remodels. In December 2012, the IRS and Treasury delayed implementation of the repair regulations until Jan. 1, 2014. Final regulations are expected to be issued by the IRS and Treasury during the 2013 calendar year.