SECTION 1. PURPOSE

This revenue procedure modifies and supersedes Rev. Proc. 2000–22, 2000–20 I.R.B. 1008, and provides that the Commissioner of Internal Revenue will exercise his discretion to except a qualifying taxpayer with average annual gross re

ceipts of $1,000,000 or less from the requirements to use an accrual method of accounting under § 446 of the Internal Revenue Code and to account for inventories under § 471. This revenue procedure also provides the procedures by which a qualifying taxpayer (as defined in section 3 of this revenue procedure) may obtain automatic consent to change to the cash receipts and disbursements method of accounting (the cash method) and to a method of accounting for inventory as materials and supplies that are not incidental under § 1.162–3 of the Income Tax Regulations.