The List of Tax Method Modifications that are Automatically Applied has been Revised

The IRS released Rev. Proc. 2022-14 on Monday, which contains an exhaustive list of modifications to tax accounting techniques to which Rev. Proc. 2015-13, as later amended, applies automatically.

As a result of the revisions made in Rev. Proc. 2015-13, the IRS may now provide automatic and advance nonautomatic consent to a change in an entity’s accounting method under Section 446(e). Rev. Procs. 2015-33, 2016-1, 2017-59, 2021-26, and 2021-34 have subsequently made changes to it.

According to the new Rev. Proc. 2022-14, the list of automatic adjustments in RPC 2019-43 has been significantly altered.

Rev. Proc. 2022-14’s method revisions encompass a wide variety of tax accounting procedures and are organised into 32 parts in code section order. Common examples include switching from an illegal to a legal way of calculating depreciation and amortisation (Section 6.01). (Depreciation and amortisation make up the majority of the adjustments, making up 22 in total.) The line pack gas or cushion gas approach (change.02 of Section 11, Capital Expenditures — see Rev. Rul. 97-54 for a detailed discussion) seems to be the most uncommon of the several adjustments that have been made.

Changes to the methods are detailed in each instance, as well as how they may be put to use. Conditions of inapplicability and extra criteria may also be included in the description There is a designated automated accounting method change number that may be used to complete Form 3115, the Application for Change in Accounting Method, as well as authorized IRS personnel for more information.

According to Rev. Proc. 2022-14, 22 major revisions and clarifications have been made to the previously published list of automatic changes. According to the new language, Section 20.01’s first sentence no longer includes sums for medical services provided as deferred compensation under Section 404, which is a change to the timing of when employee compensation responsibilities are incurred. Obsolete wording was eliminated or changed in many places.

Form 3115s submitted on or after Jan. 31, 2022, for a year of change ending on or after May 31, 2021, are filed under the automatic change procedures of Rev. Proc. 2015-13, as clarified and updated, are typically covered by Rev. Proc. 2022-14.

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