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Revision to accounting method change Rev Proc provides liberal transition rule

Rev Proc 2015-13, 2015-5 IRB 419

IRS has issued a revised version of Rev Proc 2015-13, which provides the general procedures under which taxpayers obtain IRS consent to change a method of accounting. The revised version provides taxpayers with a more liberal transition rule than was provided in the original version of Rev Proc 2015-13, 2015-5 IRB 419, that was released in January, 2015.

Background. On Jan. 16, 2015, IRS issued Rev Proc 2015-13, which updates and revises the general procedures under Code Sec. 446(e) and Reg. § 1.446-1(e) that taxpayers should use to obtain IRS’s consent to change an accounting method for federal income tax purposes. Specifically, Rev Proc 2015-13 provides the general procedures to obtain an advance (non-automatic) IRS consent and the procedures to obtain an automatic IRS consent to change an accounting method described in Rev Proc 2015-14, 2015-5 IRB (or successor). Rev Proc 2015-13 modifies and consolidates procedures previously contained in Rev Proc 2011-14, 2011-4 IRB 330 (for automatic accounting method changes) and Rev Proc 97-27, 1997-1 CB 680 (for non-automatic accounting method changes). See Weekly Alert ¶  28  01/22/2015.

IRS revises Rev Proc 2015-13 to provide more liberal transition rule. The revised version of Rev Proc 2015-13 revises a transition rule in the Revenue Procedure’s effective date section (Section 15). The revision modifies section 15.02(1) to permit taxpayers to choose whether to use Rev Proc 2015-13 or whether to use Rev Proc 2011-14 for automatic accounting method changes for their 2014 tax returns.

The revision recognizes that some taxpayers may already have prepared a Form 3115, Application for Change in Accounting Method, for their 2014 tax year with the expectation of using the procedures in Rev Proc 2011-14. Under the revised Revenue Procedure, those taxpayers may file these Forms 3115 under the procedures in Rev Proc 2011-14, rather than under the procedures in Rev Proc 2015-13.

References: For accounting method changes, see FTC 2d/FIN ¶  G-2100  et seq.; United States Tax Reporter ¶  4464.21; TaxDesk ¶  442,400  et seq.; TG ¶  6300  et seq.