SECTION 1. PURPOSE

In order to reduce the administrative and tax compliance burdens on certain small business taxpayers and to minimize disputes between the Internal Revenue Service (Service) and small business taxpayers regarding the requirement to use an accrual method of accounting (accrual method) under § 446 of the Internal Revenue Code because of the requirement to account for inventories under § 471, this revenue procedure provides that the Commissioner of Internal Revenue will exercise his discretion to allow qualifying small business taxpayers to use the cash receipts and disbursements method of accounting (cash method) as described in this revenue procedure with respect to eligible trades or businesses. This revenue procedure also provides the procedures for these qualifying small business taxpayers to obtain automatic consent to change to the cash method for such trades or businesses.