In May 2018, ICCFA filed comments with the Internal Revenue Service in response to an IRS Notice seeking public comments on changes made in revenue recognition for taxation. The Notice was triggered in response to changes in tax regulations by the Tax Cut and Jobs Act of 2017 (TCJA), and FASB Topic 606. A complex subject, a basic example here will make the point. Where all or a portion of the proceeds from the sale of burial plots are retained by the seller, or if proceeds originally contributed to a trust are subsequently distributed from the trust to a seller, the sales proceeds are taxable to the seller. In that case, the tax treatment of the sales proceeds is affected by whether the seller uses the cash or the accrual method of accounting, and if the accrual method is used, when the seller reports the sales proceeds as revenue in the seller’s financial statements.
Prior to the enactment of TCJA, the financial reporting treatment of the sales proceeds was irrelevant to its tax treatment, so this is an entirely new impact from the new tax law. ICCFA is filing comments with the IRS to attempt to influence the IRS’s interpretation of the provisions in TCJA in a manner that is favorable to the industry and to enable members to better understand the tax consequences under the new tax law and financial reporting rules. Click here to access the ICCFA comments and click here to access the explanatory “Decision Tree” memo drafted by tax attorney Les Schneider.