SECTION 7. CHANGE IN

ACCOUNTING METHOD

.01 In General . Any change in a taxpayer’s method of accounting pursuant to this revenue procedure is a change in method of accounting to which the provisions of §§ 446 and 481 and the regulations thereunder apply.

.02 Automatic Change for Taxpayers within the Scope of this Revenue Proce- dure .

(1) Automatic change to the cash method . A qualifying small business taxpayer that wants to use the cash method as described in this revenue procedure for

May 6, 2002 822 2002–18 I.R.B.

2002–19, the period for negative § 481(a) adjustments is one year, and the period for positive § 481(a) adjustments is four years.

.04 Taxpayers Not within the Scope of this Revenue Procedure .

(1) A taxpayer that ceases to qualify for the qualifying small business taxpayer exception described in section 4 of this revenue procedure for a trade or business and that otherwise is required to use an accrual method for that trade or business must change to an accrual method (and, if applicable an inventory method that complies with §§ 263A and 471) for that trade or business using either the automatic change in accounting method provisions of section 5.01 of the APPENDIX to Rev. Proc. 2002–9, if applicable, as modified by Rev. Proc. 2002–19 or the advance consent provisions of Rev. Proc. 97–27 (1997–1 C.B. 679) (or its successor), as modified by Rev. Proc. 2002–19.

(2) No inference is intended regarding whether a taxpayer that does not satisfy the qualifying small business taxpayer exception in section 4 is otherwise permitted to use the cash method. Taxpayers who do not qualify to change to the cash method under this revenue procedure may still request permission to change to the cash method under Rev. Proc. 97–27, as modified. See also Rev. Proc. 2001–10 (2001–1 C.B. 272).