SECTION 1. PURPOSE

This revenue procedure modifies Rev. Proc. 97–27 (1997–1 C.B. 680) which provides procedures under which taxpayers may obtain the advance consent of the Commissioner of Internal Revenue to change a method of accounting. In addition, this revenue procedure modifies Rev. Proc. 2002–9 (2002–3 I.R.B. 327) which provides procedures for taxpayers within the scope of that revenue procedure to obtain automatic consent to change a method of accounting.

The changes to Rev. Proc. 97–27 and Rev. Proc. 2002–9 include:

(1) allowing a taxpayer to change its method of accounting prospectively, without audit protection, if the method to be changed is an issue pending for a taxable year under examination or an issue under consideration by either an appeals office or a federal court;

(2) providing that, in the case of changes in method of accounting that result in a negative ( i.e., taxpayerfavorable) § 481(a) adjustment, the entire amount of the adjustment will be taken into account in the year of change; and

(3) certain other conforming and clarifying changes.

For a discussion of the policy reasons for certain of the modifications provided by this revenue procedure, see Announcement 2002–37 (2002–13 I.R.B. 703)