SECTION 3. BACKGROUND

.01 In the preamble to the final regulations issued January 25, 2000, under

§§ 167(f) and 197 of the Internal Revenue Code (T.D. 8865, 2000–7 I.R.B. 589), the Internal Revenue Service advised taxpayers that they may not rely on the procedures in Rev. Proc. 69–21, 1969–2 C.B. 303, to the extent the procedures are inconsistent with § 167(f) or § 197, or the final regulations thereunder.

.02 Except as otherwise expressly provided, §§ 446(e) and 1.446–1(e) provide that a taxpayer must obtain the consent of the Commissioner of Internal Revenue before changing a method of accounting for federal income tax purposes. Section 1.446–1(e)(3)(ii) authorizes the Commissioner to prescribe administrative procedures setting forth the limitations, terms, and conditions deemed necessary to permit a taxpayer to obtain consent to change a method of accounting.