Fixed Asset Depreciation Recovery
Recover Overpaid Taxes and Increase Cash Flow with a Look-Back Study
Did you know that previously overpaid taxes in prior years can be recovered through quick refund checks or reduced quarterly tax payments?
The IRS has issued and modified a Revenue Procedure (2007-16) that addresses the issue of taxpayers who have claimed less depreciation than what they were entitled to, i.e., less than the allowable amount. There is now an automatic consent procedure that allows such taxpayers to change their method of accounting and claim the allowable depreciation (or amortization) amount. This change of accounting method simply means the change from not claiming the allowable amount of depreciation to claiming it.
Companies do not need to file amended tax returns or wait until filing their returns at the end of the year. A simple form – IRS Form 3115, Application for Change in Accounting Method – can be filed with the estimated quarterly tax payment for a quick tax refund.
To assist taxpayers in recovering lost tax benefits, Paragon offers tax-saving Look-Back Studies that identify potential savings. This service entails a complete review of cost capitalizations on prior construction, leasehold improvements, renovations, and acquisitions to determine potential reclassification and recovery of unclaimed depreciation to which the taxpayer was entitled.
Highlights of a Fixed Asset Depreciation Recovery Look-Back Study
- Let us review your cost capitalizations on prior new construction, renovations, acquisitions, etc. to determine reclassification of unclaimed depreciation.
- Discover additional savings from potential reduction in property taxes and property insurance premiums.
- Amended tax returns are not required to claim unclaimed depreciation.
Who could have predicted that an accounting-based cost segregation study done 6 years ago on a $200 Million headquarters complex overlooked over half of the personal property? That approach identified just 11.2%, while the look back study found a solid 27.6% of 5 year DDB personal property– all recovered in the current tax year!