SECTION 6. CHANGE IN METHOD

OF ACCOUNTING

.01 In General . A change to the replacement cost method provided by this revenue procedure is a change in method of accounting to which the provisions of § 446 and the regulations thereunder apply. Therefore, a taxpayer within the scope of this revenue procedure that does not use the replacement cost method provided in section 4 of this revenue procedure on March 12, 2002, but wants to use this safe harbor method for a taxable year ending on or after December 31, 2001, must file a Form 3115.

.02 Automatic change to the replace- ment cost method . A taxpayer within the scope of this revenue procedure that wants to change its method of determining cost to the replacement cost method provided by this revenue procedure must follow the automatic change in accounting method provisions of Rev. Proc. 2002–9 (2002–3 I.R.B. 327) with the following modifications:

(1) The scope limitations in section 4.02 of Rev. Proc. 2002–9 do not apply to a taxpayer that wants to make the change for its first or second taxable year ending on or after December 31, 2001;

(2) A change to the replacement cost method under the provisions of Rev. Proc. 2002–9 must be effected on a cut-off method. Thus, the change in method of accounting is made without a § 481(a) adjustment;

(3) A taxpayer making a change under this section 6.02 of this revenue procedure for its first taxable year ending on or after December 31, 2001, that before April 11, 2002, filed its original federal income tax return for such year is not required to comply with the filing requirement in section 6.02(3)(a) of Rev. Proc. 2002–9, provided the taxpayer complies with the following filing requirement. The taxpayer must complete and file a Form 3115 in duplicate. The original must be attached to an amended federal income tax return for the taxpayer’s first taxable year ending on or after December 31, 2001. This amended return must be filed no later than September 9, 2002. A copy of the Form 3115 must be filed with the national office (see section

Consideration of these factors has led the Service to conclude that, for reasons of administrative convenience, burden reduction, and avoidance of further controversy in this area, a safe harbor method of accounting to determine the cost of vehicle parts inventory using replacement cost to approximate actual cost should be provided to automobile dealers. Accordingly, a safe harbor method is provided in section 4 of this revenue procedure and is available to automobile dealers that satisfy the requirements of this revenue procedure. The Service also is willing to consider requests of other industries for similar safe harbors if the facts of those industries are similar to those described above.