IRS Updates Automatic Accounting Method Change Procedures
The IRS recently issued Rev. Proc. 2021-34, which updates the list of accounting method changes to which automatic change procedures apply.
The revenue procedure modifies Rev. Proc. 2019-43 to provide procedures under Sec. 446 and Regs. Sec. 1.446-1(e) to obtain automatic consent from the IRS to change methods of accounting to comply with final regulations under Regs. Secs. 1.451-3, 1.451-8, and 1.1275-2(l) and to change methods of accounting for certain inventory costs to comply with Secs. 263A, 461, and 471 if the changes are related to compliance with Regs. Sec. 1.451-3 and/or Regs. Sec. 1.451-8.
The changes cover matters such as certain uniform capitalization (UNICAP) methods, changes in overall method of accounting from the cash method to an accrual method, timing of income recognition and the timing of incurring inventory costs.
Rev. Proc. 2021-34 also modifies Rev. Proc. 2015-13 to provide procedures for a taxpayer to obtain consent from the IRS to change its method of accounting to comply with Regs. Sec. 1.451-3 and/or Regs. Sec.1.451-8 by providing rules related to cost offset method changes.
Rev. Proc. 2021-34 is effective for a Form 3115 filed on or after Aug. 12, 2021, with certain exceptions.