Automatic accounting method changes list updated by IRS

In Rev. Proc. 2024-23, the IRS on Tuesday 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, 2021-34, 2022-14, and 2023-24.

The method changes in Rev. Proc. 2024-23 are arranged in 32 sections by Code section, covering a broad array of tax accounting methods.

The revenue procedure makes 21 significant changes to the list of automatic changes in Rev. Proc. 2023-24. 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.

Rev. Proc. 2024-23 includes a list of the 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 are modified by adding subsections that provide that the change under each section does not apply to a taxpayer changing to or from the direct reallocation method or the step-allocation method. It also does not apply to a taxpayer using the direct reallocation method or step-allocation method that wishes to either make an election or revoke an election to use the Regs. Sec. 1.263A(g)(4)(ii) 90-10 de minimis rule to allocate a mixed service department’s costs to resale activities. Instead, this 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, 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 Martha Waggoner at Martha.Waggoner@aicpa-cima.com.