What is "reasonable cause" under the deferral measures of the Electronic Bookkeeping Act?

The Electronic Bookkeeping Law is scheduled to be revised. The amendment includes an announcement that the temporary measure that allowed only paper preservation will end. Instead, a grace period is planned.

In order to apply for this grace period, "reasonable grounds" are required. In this issue, we will consider what these "reasonable grounds" are.

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From Appeasement to Deferment

During 2022 and 2023, it was allowed without having to comply with the Electronic Bookkeeping ActThis is what is called appeasement. The name is confusing, but it is a way of saying, "For now, we will wait without responding.

It was confirmed that this will expire on December 31, 2023.

Instead,'You can continue to save paper if you want to save data.'The grace period is scheduled to be extended to the next fiscal year. However, "reasonable cause" is required to apply for the grace period.

What is a substantial reason?

From compelling reasons to probable cause

The content of the considerable reason is not clear. But consider the severity of the language.

So far, it has been "compelling reasons. By "unavoidable," we mean, "We really want to do it, but for some compelling reason we can't." This means "I really want to respond, but I can't because of unavoidable reasons.

In contrast, "reasonable cause" does not require compelling reasons. Even if there is no compelling reason,If there is some reason, it will be accepted.This is considered to be the case.

The specifics are not clear.

The purpose of probable cause is to be broad and gentle.

Let's look at some examples of what we are told would fall under the category of "probable cause."

What to expect

  1. Human resources are not available to respond in time.
  2. Software not implemented in time

This area.
It does not appear that notification or approval is required.

This means,At any rate, if you tell them there's a reason, they'll be able to apply for a deferral.That is to say.
Of course, this is a tentative interpretation, so please check back for the official announcement.

We can assume that most people will apply.

As above.It's safe to assume that "probable cause" applies to most people.It will be. Now it's time to consider whether to apply it or whether it is the most appropriate management option.

The IRS aims to accommodate a variety of people

From the taxpayer's perspective, the IRS and the tax office are the ones who are cracking down. Therefore, one might think that they would take a somewhat harsh approach and tighten their belts.

However, this Electronic Bookkeeping Act concerns all businesses. If the requirements are made too strict, it is expected that many people will not be able to comply. In addition, while those reading this article may be okay, a broader view of the world reveals that there are people who have businesses but do not keep books at all, or who do not use electronic devices to process their transactions at all.

The system is currently loosened with a view to accommodating such a wide range of people. Although proper preparation is necessary, it is possible that the system will not be as strict as it is at the time of application. Of course, the risk of being subject to additional taxation at the time of a tax audit is a point to keep in mind.

The official announcement would be around June 2023.

In addition, it is expected that the IRS will issue an explanatory document in conjunction with this amendment. The same applies to the notification. It is expected that the IRS will issue an explanatory document in June 2023.

If you are waiting to see when the information will be available, check back in June 2023 or so. l

Let's make sure we are well prepared.

When dealing with the principle, these notices and explanatory documents are not very relevant. As the law is roughly out there, it is possible to take measures even in the current situation.

Some of you may be sole proprietors or small and medium-sized enterprises who would like to take action in the future. For those people, we are planning to hold a free webinar. If you have time, please join us.

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