SECTION 6. CHANGES IN METHOD

OF ACCOUNTING

.01 In General . A change in the treatment of customer cores in inventory to the CAV method provided by this revenue procedure is a change in method of accounting to which the provisions of §§ 446 and 481 and the regulations thereunder apply. Therefore, a taxpayer within the scope of this revenue procedure that wishes to

change to the CAV method for a taxable year ending on or after December 31, 2002, must file a Form 3115, Application for Change in Accounting Method.

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

(1) Automatic change to the CAV method. A taxpayer within the scope of this revenue procedure that wants to change to the CAV method must follow the automatic change in accounting method provisions of Rev. Proc. 2002–9, as modified by Rev. Proc. 2002–19, 2002–13 I.R.B. 696, Announcement 2002–17, 2002–8 I.R.B. 561, and Rev. Proc. 2002–54, 2002–35 I.R.B. 432, with the following modifications:

(a) The scope limitations in section 4.02 of Rev. Proc. 2002–9 do not apply to a taxpayer that wants to change to the CAV method for its first taxable year ending on or after December 31, 2002, provided the taxpayer’s method of accounting for cores is not an issue under consideration in examination (within the meaning of section 3.09 of Rev. Proc. 2002–9) at the time the Form 3115 is filed with the national office;

2003–6 I.R.B. 447 February 10, 2003

ber 31, 1982, any organization (other than a private foundation) that normally has annual gross receipts of not more than $25,000. Rev. Proc. 94–17, 1994–1 C.B. 579, relieves certain foreign organizations (other than private foundations) from the requirement to file an annual return on Form 990. However, neither revenue procedure addresses organizations formed in United States possessions. Further, these revenue procedures do not distinguish between receipts from sources within the United States and from sources within United States possessions.

.04 Sections 861 through 865 of the Code and the regulations thereunder describe what types of income will be treated as income from sources within the United States.

.05 Section 7701(a)(9) of the Code defines “United States” when used in a geographical sense as only the States and the District of Columbia.

.06 Section 7701(a)(30) of the Code defines “United States person” as a citizen or resident of the United States, a domestic partnership, a domestic corporation, any estate that is not a foreign estate (within the meaning of section 7701(a)(31) of the Code), or any trust if “(i) a court within the United States is able to exercise primary supervision over the administration of the trust, and (ii) one or more United States persons have the authority to control all substantial decisions of the trust.”

.07 For purposes of this revenue procedure, a “United States possession organization” is any organization created or organized in a possession of the United States.

.08 A number of organizations formed in United States possessions have asked the Service for relief from filing Form 990 similar to the relief offered to foreign organizations. Because they do not have more than $25,000 in receipts from United States sources and no significant activity in the United States, the organizations believe the filing serves no useful purpose for tax administration but imposes a significant burden on the affected organizations.