IRS Updates List of Automatic Accounting Method Changes
The IRS recently issued Rev. Proc. 2024-23, providing an updated list of changes in tax accounting methods to which the automatic change procedures in Rev. Proc. 2015-13, as subsequently modified, apply.
Rev. Proc. 2015-13 had updated and revised general procedures under Sec. 446(e) to obtain the IRS' consent to obtain automatic and advance nonautomatic consent to change an accounting method. Since then, it has been modified by Rev. Procs. 2015-33, 2016-1, 2017-59, 2021-26, 2021-34, 2022-14 and 2023-24.
The method changes in Rev. Proc. 2024-23 are listed in 32 sections in Code section order. The revenue procedure makes 21 significant changes to the list of automatic changes in Rev. Proc. 2023-24. Each method change is described, including its applicability. Descriptions may also include conditions of inapplicability and additional requirements. Each method change is given a designated automatic accounting method change number for completing Form 3115.
The new revenue procedure includes 21 significant modifications and clarifications it makes to the list of automatic changes in Rev. Proc. 2023-24. For example, Sections 12.01 and 12.02 add subsections that provide that the change under each section does not apply to a taxpayer changing to or from the direct reallocation method or step allocation method. It also does not apply to a taxpayer using the direct reallocation method or step allocation method who would like to make or revoke an election to use the Regs. Sec. 1.263A(g)(4)(ii) 90-10 de minimis rule in order to allocate a mixed service department's costs to resale activities. That change must be requested under the nonautomatic change procedures provided in Rev. Proc. 2015-13.
Rev. Proc. 2024-23 is generally effective for Forms 3115 filed on or after April 30, 2024, for a year of change ending on or after Sept. 30, 2023, filed under the automatic change procedures of Rev. Proc. 2015-13 as clarified and modified.