SECTION 6. CHANGE IN

ACCOUNTING METHOD

.01 In general. Any change in a taxpayer’s method of accounting pursuant to this revenue procedure is a change in method of accounting to which the provisions of §§ 446 and 481 and the regulations thereunder apply.

.02 Automatic change for taxpayers within the scope of this revenue procedure.

(1) Automatic change to the cash method. A taxpayer that qualifies for the small taxpayer exception described in section 4 of this revenue procedure that wants to change to the cash method must follow the automatic change in account

ing method provisions of Rev. Proc. 99–49, 1999–52 I.R.B. 725 (or its successor) with the following modifications:

(a) The scope limitations in section 4.02 of Rev. Proc. 99–49 do not apply. However, if the taxpayer is under examination, before an appeals office, or before a federal court with respect to any income tax issue, the taxpayer must provide a copy of the Form 3115, Application for Change in Accounting Method, to the examining agent(s), appeals officer, or counsel for the government, as appropriate, at the same time that it files the copy of the Form 3115 with the national office. The Form 3115 must contain the name(s) and telephone number(s) of the examining agent(s), appeals officer, or counsel for the government, as appropriate.

(b) A taxpayer making a change under section 6.02 of this revenue procedure for its first tax year ending on or after December 17, 1999, that, on or before July 14, 2000, files its original federal income tax return for such year, is not subject to the filing requirement in section 6.02(2)(a) of Rev. Proc. 99–49, provided the taxpayer complies with the following filing requirement. The taxpayer must complete and file a Form 3115 in duplicate. The original must be attached to the taxpayer’s amended federal income tax return for the taxpayer’s first tax year ending on or after December 17, 1999. This amended return must be filed no later than November 13, 2000. A copy of the Form 3115 must be filed with the national office (see section 6.02(5) of Rev. Proc. 99–49 for the address) no later than when the taxpayer’s amended return is filed.

(c) For a change in method of accounting within the scope of this revenue procedure, the provisions of Rev. Proc. 99–49 are effective for tax years ending on or after December 17, 1999.

(d) Taxpayers filing Form 3115 for a change in method of accounting under section 6.02 of this revenue procedure are reminded to complete all applicable parts of the form, including Part II, line 17 (regarding information on gross receipts in previous years) and Part III (regarding the § 481 adjustment). Such taxpayers must also complete Part I of Schedule A of Form 3115, but need not complete Part II. Taxpayers should write “Filed under Rev. Proc. 2000–22” at the top of the form.

2000–20 I.R.B. 1009 May 15, 2000

(2) Change to comply with § 1.162–3. A taxpayer that qualifies for the small taxpayer exception described in section 4 of this revenue procedure that does not want to account for inventories must make any necessary change from the taxpayer’s inventory method (and, if applicable, from the method of capitalizing costs under § 263A) to treat merchandise inventory in the same manner as a material or supply that is not incidental under § 1.162–3. For purposes of such a change, the rules of section 6.02(1) of this revenue procedure apply. Taxpayers may file a single Form 3115 for both changes described in sections 6.02(1) and (2).

.03 Taxpayers not within the scope of this revenue procedure. A taxpayer that ceases to qualify for the small taxpayer exception described in section 4 of this revenue procedure and otherwise is required to account for inventories must change to an

inventory method that complies with §§ 263A and 471 and an accrual method with respect to purchases and sales of merchandise using either the automatic change in accounting method provisions of section 5.01 of the APPENDIX to Rev. Proc. 99–49, if applicable, or the advance consent provisions of Rev. Proc. 97–27, 1997–1 C.B. 680 (or its successor).