“IRS Updates “Automatic Consent” Revenue Procedure (Rev. Proc. 2022-14)
By: John Conner
The IRS has provided an updated list of automatic changes to which the automatic change procedures of Rev. Proc. 2015-13 apply. Some of the significant changes include accounting method changes related to (1) timing of incurring liabilities for employee compensation, (2) depreciation method changes (e.g., late elections or revocation of elections, qualified improvement property, tangible property under Code §168(g), _ as well as catching up on missed depreciation), (3) treatment of research and experimental expenditures, (4) costs of computer software, (5) Uniform Capitalization (UNICAP) treatment, (6) interest capitalization, (7) deduction of amounts owed to a Controlled Foreign Corporation (CFC), (8) accrual to cash method, (9) the Code §471 method of accounting for inventory, and (10) basis of computing reserves under Code §807(f).
Comment: Having “Automatic Consent” status for certain requests for “Changes in Accounting Method” (i.e., on Form 3115) is advantageous insomuch as there is no fee required for submission, and the IRS has no input on whether or not to grant the change (e.g., catching up on missed depreciation, or changing back from accrual to the cash method of accounting). Of course, the Service is free to subsequently include such issues should they taxpayer’s return be audited at some future point in time. In addition, although not necessary, I would recommend that the caption “Automatic Consent Pursuant to Rev. Proc. 2022-14” (i.e., which is the latest IRS “Automatic Consent” revenue procedure) be put at the top of the Form 3115 in “red” so that the IRS Service Center can easily identify the status of this request.