List of automatic tax method changes updated

By Paul Bonner

In Rev. Proc. 2022-14, the IRS on Monday provided a comprehensive 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 itself updated and revised prior general procedures under Sec. 446(e) to obtain the IRS's consent to obtain automatic and advance nonautomatic consent to change a method of accounting. It has since been modified by Rev. Procs. 2015-33, 2016-1, 2017-59, 2021-26, and 2021-34.

Rev. Proc. 2022-14 makes a number of significant changes to the list of automatic changes in Rev. Proc. 2019-43.

The method changes in Rev. Proc. 2022-14 are arranged in 32 sections arranged in Code section order, covering a broad array of tax accounting methods. Some are common, such as changing from an impermissible to a permissible method of accounting for depreciation or amortization (Section 6.01). (Depreciation and amortization forms the biggest category, with 22 changes listed.) Far more changes appear unusual, such as the line pack gas or cushion gas method (change .02 of Section 11, Capital Expenditures — see Rev. Rul. 97-54 for a complete description).

In each case, the method change is described, including its applicability. The description may also include conditions of inapplicability and additional requirements. Each method change is given a designated automatic accounting method change number for use in completing Form 3115, Application for Change in Accounting Method, and contact information of one or more designated IRS employees for more information.

Rev. Proc. 2022-14 lists 22 significant modifications and clarifications it makes to the list of automatic changes in Rev. Proc. 2019-43. For example, Section 20.01, which concerns a change to the timing of incurring liabilities for employee compensation, is modified to provide paragraph (1) does not include any amounts for medical services that are deferred compensation under Sec. 404. In a number of instances, obsolete language has been removed or revised.

Rev. Proc. 2022-14 is generally effective for Forms 3115 filed on or after Jan. 31, 2022, for a year of change ending on or after May 31, 2021, that is filed under the automatic change procedures of Rev. Proc. 2015-13, as clarified and modified.

— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.

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