The American Institute of CPAs (AICPA) has made several recommendations to the IRS that the group hopes will make accounting method change procedures under Revenue Procedure 2015-13 more consistent and clear.
The procedure, Changes in Methods of Accounting, establishes the process for taxpayers to get automatic changes in accounting methods and advance consent for a change.
The AICPA made these recommendations:
- Revise the three-month window period to refer to the two months prior to and the one month after the extended due date of the taxpayer’s return so that it is consistent with the intent of the three-month window.
- Clarify that the special rule under Section 8.02(5) of the revenue procedure refers to the three taxable years immediately prior to the tax year of change. (The section pertains to a controlled foreign corporation or 10/50 corporation, which refers to 150 percent of the average amount of foreign taxes deemed paid under sections 902 and 960 in the shareholder’s three prior taxable years.)
- Revise Section 13.01(1) of the revenue procedure to allow taxpayers to request a revision to the year of change for a non-automatic Form 3115, Application for Change in Accounting Method, on or after the first day of the third month following the month in which the taxpayer’s federal income tax return is due (excluding extensions) for the original year of change requested on Form 3115.
The AICPA notes that its comment letter to the IRS in November 2016 regarding the revenue procedure included suggestions about how the agency could achieve its goal of encouraging voluntary compliance with proper tax accounting methods while keeping administrative compliance burdens to a minimum.