IRS Updates List of Automatic Accounting Method Changes
The IRS recently issued Rev. Proc. 2023-24, updating the list of accounting method changes that are available automatically. The guidance also details the procedures, including the terms and conditions, for each change.
Rev. Proc. 2023-24 updates the list of method changes to which the automatic change procedures in Rev. Proc. 2015-13, as subsequently modified, apply. Rev. Proc. 2015-13 had updated and revised procedures under Sec. 446(e) to obtain consent by the IRS 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 and 2022-14.
The method changes in Rev. Proc. 2023-24 are listed in 32 sections in Code section order. The revenue procedure makes nearly 30 significant changes to the list of automatic changes in Rev. Proc. 2022-14. Many of the changes relate to depreciation and amortization or uniform capitalization methods.
Each method change is described, including its applicability. Descriptions may additionally include conditions of inapplicability and additional requirements. Each method change is provided a designated automatic accounting method change number for completing Form 3115.
The new revenue procedure includes 29 significant modifications and clarifications it makes to the list of automatic changes in Rev. Proc. 2019-43. For example, Section 6.01 regarding changing from an impermissible to a permissible method of accounting for depreciation or amortization is modified to provide that Section 6.01 does not apply to any property for which the taxpayer has claimed a federal income tax credit unless the change does not alter the amount of the federal income tax credit.
Rev. Proc. 2023-24 is generally effective for Forms 3115 filed on or after June 15, 2023, for a year of change ending on or after Oct. 31, 2022, that is filed under the automatic procedures of Rev. Proc. 2015-13, as clarified and modified.