Not Signing a Form 3115 is Considered to be a Bad Sign

Annually, the IRS compiles a “Dirty Dozen” list of 12 scams and schemes that taxpayers may encounter, especially during tax filing season. Day six of the campaign will hit home with building owners and investors who use cost segregation firms. Specifically, cost segregation firms that will not sign a Form 3115.

Anytime a cost segregation study is performed on a building purchased in a prior tax year, a Form 3115: Application for Change in Accounting Method, must be completed. A Form 3115 is highly complex and must be prepared perfectly for the IRS to accept the method change.

Not signing the 3115, according to IR-2023-59, is a HUGE RED FLAG. Only reputable firms will complete AND sign the 3115 Form. Signing the Form 3115 shows the IRS that the cost segregation firm is responsible for its calculations. If the form is not signed, the cost segregation firm transfers all risk onto the client’s CPA firm and the taxpayer. If the calculations are incorrect, guess who is responsible for penalties and interest? The taxpayer!

According to IR-2023-59, taxpayers must avoid deceitful tax return preparers. A red flag is hoisted when the tax preparer is unwilling to sign the dotted line. 

“Avoid these “ghost” preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as REQUIRED BY LAW.” IR-2023-59 IRS.gov.

Don’t leave yourself vulnerable to unethical practices and potential misinformation on your tax return. Remember, TPTM prepares, completes, and SIGNS all IRS 3115 forms. 

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