Additional time for filing automatic accounting method changes.

• Author: Weber, Mindy Tyson

While taxpayers generally must obtain the IRS's consent to change an accounting method for federal income tax purposes (see Sec. 446(e) and Regs. Sec. 1.446-1(e) (3)), the IRS grants automatic consent for certain accounting method changes, provided the taxpayer complies with the procedures and meets the scope requirements set forth in Rev. Proc. 2011-14 (or its successor), as clarified and modified by Rev. Proc. 2012-39.

A taxpayer eligible for automatic consent under Rev. Proc. 2011-14 generally files a Form 3115, Application for Change in Accounting Method, by the due date (including extensions) of its federal income tax return for the tax year for which the method change is to be effective. In addition, the taxpayer files a duplicate (and in certain instances, triplicate) copy of the Form 3115 with the IRS National Office (and/or in some cases with the IRS's Ogden, Utah, address) no later than the point at which it timely files the Form 3115 with its tax return for the year of change. For example, a calendar-year corporation that properly extended and timely files its 2012 income tax return on Sept. 16, 2013, may include a Form 3115 with its tax return to change a method of accounting eligible for automatic consent that is effective as of Jan. 1, 2012. A user fee is not required for filing an automatic method change. A taxpayer that properly files a Form 3115 generally receives prior-year audit protection for the item for which the method change is effected, unless otherwise indicated by the applicable appendix section of Rev. Proc. 2011-14.

Automatic Extension of Time to File an Automatic Form 3115

A taxpayer that timely filed but did not extend its 2012 tax return may still have time to file an automatic Form 3115. Pursuant to Rev. Proc. 2011-14, a taxpayer may do so by filing an amended return, along with the original Form 3115 for the method change and a statement that the Form 3115 is being filed pursuant to Regs. Sec. 301.9100-2(b), within six months from the due date of the return for the year of change (excluding extensions) (see Rev. Proc. 2011-14, S6.02(3)(d)(i)). In addition, the taxpayer must file with the IRS National Office and/or Ogden, Utah, office a copy of the Form 3115, as required, no later than when the original Form 3115 is filed with the amended return. The IRS will grant an extension of time to file an automatic Form 3115 (i.e., beyond six months from the due date of the return for the year of change, excluding...