SECTION 9. REVIEW BY DIRECTOR

.01 In general . A director must apply a ruling obtained under this revenue procedure in determining the taxpayer’s tax liability unless the director recommends that the ruling should be modified or revoked. The director will ascertain if:

(1) the representations on which the ruling was based reflect an accurate statement of the material facts;

(2) the amount of the adjustments required to effect the change, if any, were properly determined;

(3) the adoption, change, or retention in annual accounting period was implemented as proposed in accordance with the terms and conditions of the letter ruling and this revenue procedure;

(4) there has been any change in the material facts on which the ruling was based during the period that the new or retained annual accounting period was used; and

(5) there has been any change in the applicable law during the period the new or retained annual accounting period was used.

.02 National office consideration . If a director recommends that the ruling (other than the amount of the adjustments required to effect the change) should be modified or revoked, the director will forward the matter to the national office for

2001–23 I.R.B. 1313 June 4, 2001

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collections of information in this revenue procedure are set forth in section 6.01. The information is required to determine whether the taxpayer’s requested annual accounting period will result in a distortion of income. This information will be used by the Service to determine which terms, conditions, and adjustments will be necessary to effect the adoption, change, or retention in annual accounting period. The collections of information are required to obtain the Service’s approval for the adoption, change, or retention. The likely respondents are the following: individuals, farms, business or other for-profit organizations, non-profit organizations, and small businesses or organizations.

The estimated total annual reporting burden is 2,000 hours.

The estimated annual burden per respondent varies from .5 of an hour to 5 hours, depending on the individual circumstances, with an estimated average of 2 hours. The estimated number of respondents is 1,000.

The estimated annual frequency of responses is on occasion.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

DRAFTING INFORMATION

The author of this revenue procedure is Martin Scully, Jr. of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Mr. Scully at (202) 622-4960 (not a toll-free call).

Procedures for Requesting an Adoption, Change, or Retention of Accounting Period

Notice 2001–35

This notice provides a proposed revenue procedure that, when finalized, will

provide the procedures under § 442 of the Internal Revenue Code, and the regulations thereunder, for certain partnerships, S corporations, electing S corporations, and personal service corporations (PSCs) to obtain automatic approval of the Commissioner to adopt, change, or retain their annual accounting periods.

This proposed revenue procedure is being issued concurrently with new proposed regulations under §§ 441, 442, 706, and 1378, and a proposed revenue procedure (Notice 2001–34, 2001–23 I.R.B. 1302) providing the procedures for any taxpayer outside the scope of the automatic approval revenue procedures to establish a business purpose and request the prior approval of the Commissioner to adopt, change, or retain an annual accounting period. References in this proposed revenue procedure to the regulations under §§ 441, 442, 706, and 1378 are to the new proposed regulations, and references to “Rev. Proc. 2001–XX” are to the proposed prior approval revenue procedure. All three documents are intended to be finalized concurrently.

The proposed revenue procedure modifies, amplifies, and supersedes Rev. Proc. 87–32, 1987–2 C.B. 396. In general, the proposed revenue procedure provides additional circumstances under which the Internal Revenue Service will grant automatic approval for an adoption, change, or retention in annual accounting period based on requests that the Service has granted under its current ruling practice. In addition, the proposed revenue procedure provides audit protection to taxpayers adopting, changing, or retaining an annual accounting period under the revenue procedure. In conjunction with the provision of audit protection, taxpayers under examination that do not obtain consent of the appropriate director are not within the scope of the proposed revenue procedure.

The Service welcomes comments on the proposed revenue procedure provided in this notice. Comments should be submitted by September 11, 2001, either to:

Internal Revenue Service P.O. Box 7604 Ben Franklin Station Washington, DC 20044 Attn: CC:PA:T:CRU (ITA) Room 5228

or electronically via: