Automatic Procedures for Changing Accounting Methods Updated, Expanded

The IRS on January 10 released updated procedures under which taxpayers can receive automatic consent to change their accounting methods (Rev. Proc. 2011-14). The revenue procedure updates prior guidance contained in Rev. Procs. 2008-52 and 2009-39 and gives additional accounting method changes for which taxpayers can obtain automatic consent. The revenue procedure also modifies the procedures in Rev. Proc. 97-27 for requesting and obtaining non-automatic advance consent for a change in method of accounting.

The 325-page revenue procedure covers dozens of accounting method changes. It also reiterates in detail the rules applicable to accounting method changes and the application process and specifies when audit protection is available for tax years prior to the year of the change.

The revenue procedure is generally effective for applications for automatic consent made on or after January 10, 2011, for a year of change ending on or after April 30, 2010. It is effective for requests for non-automatic advance consent for a change in method of accounting on Forms 3115, Application for Change in Accounting Method, filed under Rev. Proc. 97-27 (as modified by subsequent revenue procedures) on or after January 10, 2011, for a year of change ending on or after January 10, 2011.The procedure also contains some transition rules for taxpayers who had timely filed an application for a change of accounting method on Form 3115 before January 10, 2011, under prior procedures.