SECTION 1. PURPOSE

The Internal Revenue Service is currently working on regulations under § 448(d)(5) of the Internal Revenue Code as amended by § 403 of the Job Creation and Worker Assistance Act of 2002, Pub. L. No. 107–147, § 403, 116 Stat. 21 (the Act), regarding the nonaccrual experience (“NAE”) method. Until such regulations are issued in final form, this notice provides interim guidance on which taxpayers may rely. The Service expects that the final regulations will incorporate the rules set forth in this notice and will be effective for taxable years ending after March 9, 2002. This interim guidance includes: (1) for taxpayers who no longer qualify to use a NAE method, procedures to change their method of accounting; (2) for taxpayers who qualify to use a NAE method, two safe harbor NAE methods that will be presumed to clearly reflect the taxpayer’s NAE; (3) for taxpayers who qualify to use a NAE method but wish to compute their NAE using a formula other than the two safe harbors provided, the requirements that must be met in order to use an alternative formula to compute their NAE; and (4) for taxpayers who wish to change to a different NAE method, the procedures necessary to obtain automatic consent of the Commissioner to change to one of the safe harbor

Effective Date of Regulations Under Sections 6011 and 6112

Notice 2003–11