SECTION 7. TRANSITION RULES OF

REV. PROC. 2002–9.

Section 13.02 of Rev. Proc. 2002–9 provides that if a taxpayer filed an application with the national office for change in method of accounting described in the APPENDIX of Rev. Proc. 2002–9 for a year of change for which Rev. Proc. 2002–9 is effective, and the application is pending with the national office on January 7, 2002, the taxpayer may instead make the change under Rev. Proc. 2002–9, provided that the taxpayer notifies the national office of its intent to do so prior to the later of February 15, 2002, or the issuance of the letter ruling granting or denying consent to the change. If such a taxpayer chooses to make the change under Rev. Proc. 2002–9, section 13.02 requires the taxpayer to make any appropriate modifications to the application to comply with the applicable provisions of Rev. Proc. 2002–9. In some cases, the national office retains the application, and the taxpayer makes the necessary modifications by submitting supplementary representations to the national office. In other cases, the national office returns the application to the taxpayer, and the taxpayer makes the necessary modifications to the application before resubmitting it to the national office.

Applications that are retained by the national office are considered to be converted to applications under Rev. Proc. 2002–9 if the taxpayer submits the necessary supplementary representations to the national office within 30 days of the Service’s first request for such representations. Applications that are returned to the taxpayer for necessary modifications are considered to be converted to applications under Rev. Proc. 2002–9 if the taxpayer resubmits to the national office the application with the appropriate modifications within 30 days after the Service returns the application to the

taxpayer. Whether the national office retains or returns the application, the date on which the taxpayer originally filed the application with the national office is treated as the date on which the application under Rev. Proc. 2002–9 is filed with the national office for purposes of that revenue procedure. Taxpayers using the transition rule are reminded to attach a copy of the modified application to their federal income tax return for the year of change. See section 6.02(3) of Rev. Proc. 2002–9.

EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2002–9 is amplified, clarified and modified. Rev. Proc. 2002–19 is amplified and clarified.

EFFECTIVE DATE

This revenue procedure is effective for taxable years ending on or after December 31, 2001.

FURTHER INFORMATION

For further information regarding this revenue procedure, contact Grant D. Anderson of the Office of Associate Chief Counsel (Income Tax and Accounting) at (202) 622–4970 (not a toll-free call).

Audit Guidance for External Auditors of Qualified Intermediaries

Rev. Proc. 2002–55