Part III—Information for Non-Automatic Change Request

Non-automatic change—scope and eligibility rules. An applicant may not use the non-automatic change procedures if any of the following eligibility limitations apply at the time Form 3115 is filed with the IRS National Office.

1. The change in accounting method is required to be made according to a published automatic change procedure, such as Rev. Proc. 2022-14.

2. The requested year of change is the final year of the trade or business, unless (a) the change is a result of a transaction to which section 381(a) applies; or (b) the applicant demonstrates to the satisfaction of the IRS National Office compelling circumstances, or that it is in the interest of sound tax administration for the applicant to change in its final year.

Line 20. If you answered “Yes,” attach an explanation describing why the applicant is not eligible to file a request under the automatic change procedures.

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Line 21. Attach true copies of all contracts, agreements, and other documents directly related to the proposed accounting method change. See section 9.03(3) of Rev. Proc. 2023-1.

Line 22. Include a statement explaining the reason for the proposed change. See sections 7.01(1)(d) and 9.03(1) of Rev. Proc. 2023-1.

Line 23. If you answered “No” to line 23, a common parent requesting an accounting method change on behalf of a member of the consolidated group must attach a statement explaining the accounting method used by each member of the consolidated group for the particular item that is the subject of the method change request. See section 6.02(5) of Rev. Proc. 2015-13.

Lines 24a and 24b. For non-automatic change requests, you must pay a user fee for each applicant. Where the filer is not an applicant, a fee is not required for the filer. See section 15 and Appendix A of Rev. Proc. 2023-1 for information regarding user fees, including reduced user fees and user fees for additional applicants filing identical changes in methods of accounting.

Pay the user fees through PAY.gov .

Note. Filers filing under the automatic change procedures do not pay a user fee.

Example 1. Filer is the common parent of a consolidated group of corporations. Filer files a single Form 3115 on behalf of itself and two other members of the consolidated group for an identical accounting method change. There are three applicants (Filer and the two other members of the consolidated group). Therefore, for a non-automatic change request, all three applicants are required to pay a user fee. The filer applicant must submit the regular user fee under section (A)(3)(b)(i) of Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section (A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the two other applicants qualify for the reduced user fee under section (A)(5)(b) of Appendix A of Rev. Proc. 2023-1.

Example 2. Filer is the common parent of a consolidated group of corporations. Filer is filing a single Form 3115 on behalf of two other members of the consolidated group for an identical accounting method change. There are two applicants on Form 3115 (the two members of the consolidated group). Filer is not changing its accounting method and, therefore, does not pay a fee on account of itself. For a non-automatic change request, both applicants are required to pay a user fee. One applicant must submit the regular user fee under section (A)(3)(b)(i) of Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section (A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the other applicant qualifies for the reduced user fee under section (A)(5)(b) of Appendix A of Rev. Proc. 2023-1. This example applies similarly to a filer that is the common sponsor of multiple entities.

Example 3. Filer, a single taxpayer, files Form 3115 on behalf of its three separate and distinct trades or businesses. The request is for an identical accounting method change. Notwithstanding that Filer is a single taxpayer, there are three applicants on Form 3115. For a non-automatic change request, all three applicants are required to pay a user fee. One applicant must submit the regular user fee under section (A)(3)(b)(i) of Appendix A of Rev. Proc. 2023-1 (or a reduced fee per section (A)(4) of Appendix A of Rev. Proc. 2023-1, if applicable), and the other two applicants qualify for the reduced user fee under section (A)(5)(b) of Appendix A of Rev. Proc. 2023-1.