SECTION 9. WHAT ARE THE

SPECIFIC AND ADDITIONAL PROCEDURES FOR A REQUEST FOR A CHANGE IN ACCOUNTING METHOD FROM THE ASSOCIATE OFFICE?

Automatic and advance consent change in accounting method requests

Automatic change in accounting method

.07 To accelerate the issuance of letter rulings, in appropriate cases near the completion of the ruling process, the Associate office representative may request that the taxpayer or the taxpayer’s representative submit a proposed draft of the letter ruling on the basis of discussions of the issues. The taxpayer is not required to prepare a draft letter ruling to receive a letter ruling.

The format of the submission should be discussed with the Associate office representative who requests the draft letter ruling. The representative usually can provide a sample format of a letter ruling and will discuss the facts, analysis, and letter ruling language to be included.

In addition to a typed draft, taxpayers are encouraged to submit this draft on a computer disk in Microsoft Word to the Associate office. The typed draft will become part of the permanent files of the Associate office, and the computer disk will not be returned. The proposed letter ruling (both typed draft and computer disk) should be sent to the same address as any additional information and contain in the transmittal the information that should be included with any additional information (for example, a penalties of perjury statement is required). See section 8.05(4) of this revenue procedure.

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(1) Substantially identical letter rulings. For letter ruling requests qualifying for the user fee provided in paragraph (A)(5)(a) of Appendix A of this revenue procedure for substantially identical letter rulings, a separate letter ruling will be issued for each entity with a common member or sponsor, or for each member of a common entity.

(2) Related § 301.9100 letter rulings. For a § 301.9100 letter ruling request from a consolidated group for an extension of time to file Form 3115 for an identical change in accounting method qualifying for the user fee provided in paragraph (A)(5)(c) of Appendix A of this revenue procedure, the Associate office generally will issue a single letter on behalf of all members of the consolidated group that are the subject of the request.

.09 The Associate office will send a copy of the letter ruling, whether favorable or adverse, to the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer’s tax return.

This section provides the specific and additional procedures applicable to a request for a change in accounting method.

A request for a change in accounting method is a specialized type of request for a letter ruling ( see section 2.01 of this revenue procedure).

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(1) Automatic change in accounting method request procedures. Certain changes in accounting methods may be made under automatic change request procedures. A change in accounting method provided in an automatic change request procedure must be made using that automatic change request procedure if the taxpayer requesting the change is within the scope of the automatic change request procedure and the change is an automatic change for the requested year of the change. A qualifying taxpayer complying timely with an automatic change request procedure is granted the consent of the Commissioner to change the taxpayer’s accounting method as provided in the automatic change request procedure. But see section 9.19 of this revenue procedure concerning review by the Associate office and the IRS director. See section 9.22 of this revenue procedure for a list of automatic change request procedures. See also section 9.23 of this revenue procedure for a list of sections, in addition to this section 9, and Appendices of this revenue procedure that apply to a request for an accounting method change. No user fee is required for a change made under an automatic change request procedure.

Sec. 8.07 January 5, 2004 30 2004-1 I.R.B.

Advance consent change in accounting method

Ordinarily only one change in accounting method on a Form 3115

Information required with a Form 3115

(2) Advance consent letter ruling requests. If a change in accounting method may not be made under an automatic change request procedure, the taxpayer may request an advance consent letter ruling by filing a current Form 3115, Application for Change in Accounting Method, under Rev. Proc. 97–27, 1997–1 C.B. 680, as modified and amplified by Rev. Proc. 2002–19, 2002–1 C.B. 696, and amplified and clarified by Rev. Proc. 2002–54, 2002–2 C.B. 432 (or successors); and this revenue procedure (see section 9.23 for a list of the sections and Appendices of this revenue procedure in addition to this section 9 that apply to a request for an accounting method change). A Form 3115 filed under Rev. Proc. 97–27 and this revenue procedure is hereinafter referred to as an “advance consent Form 3115.” A taxpayer filing an advance consent Form 3115 must submit the required user fee with the completed Form 3115. See section 15 and Appendix A of this revenue procedure for information about user fees.

.02 Ordinarily, a taxpayer may request only one change in accounting method on a Form 3115. If the taxpayer wants to request a change in accounting method for more than one unrelated item or submethod of accounting, the taxpayer must submit a separate Form 3115 for each unrelated item or submethod, except in certain situations in which the Service specifically permits certain unrelated changes to be included on a single Form 3115 (for example, see section 5.05 in the Appendix of Rev. Proc. 2002–9, 2002–1 C.B. 327, or its successor).

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Facts and other information (1) Facts and other information requested on Form 3115 and in applicable revenue procedures. In general, a taxpayer requesting a change in accounting method must file a Form 3115 unless the procedures applicable to the specific type of change in accounting method do not require a Form 3115 to be submitted.

The taxpayer must provide all information requested in the Form 3115 and its instructions, in either Rev. Proc. 97–27 or the applicable automatic change request procedure, and in the applicable sections of this revenue procedure, including a detailed and complete description of the item being changed, the taxpayer’s present and proposed method for the item being changed, information regarding whether the taxpayer is under examination, or before Appeals or a federal court, and a summary of the computation of the section 481(a) adjustment and an explanation of the methodology used to determine the adjustment.

For an advance consent Form 3115, the taxpayer must also include a full explanation of the legal basis and relevant authorities supporting the proposed method, a detailed and complete description of the facts and explanation of how the law applies to the taxpayer’s situation, whether the law in connection with the request is uncertain or inadequately addresses the issue, statement of the applicant’s reasons for the proposed change, and copies of all documents related to the proposed change.

The applicant must provide the requested information to be eligible for approval of the requested accounting method change. The taxpayer may be required to provide information specific to the requested accounting method change, such as an attached statement. The taxpayer must provide all information relevant to the requested accounting method change, even if not specifically requested by the Form 3115.

See also sections 7.01(1) and 7.01(8) of this revenue procedure.

Statement of authorities contrary to taxpayer’s views

(2) Statement of contrary authorities. For an advance consent Form 3115, the taxpayer is encouraged to inform the Associate office about, and discuss the implications of, any authority believed to be contrary to the proposed change in accounting method, such as legislation, court decisions, regulations, notices, revenue rulings, revenue procedures, or announcements.

If the taxpayer does not furnish either contrary authorities or a statement that none exists, the Associate office may request submission of contrary authorities or a statement that none exists. Failure to comply with this request may result in the Associate office’s refusal to issue a change in accounting method letter ruling.

Sec. 9.03 2004-1 I.R.B. 31 January 5, 2004

Documents (3) Copies of all contracts, agreements, and other documents. True copies of all contracts, agreements, and other documents pertinent to the requested change in accounting method must be submitted with an advance consent Form 3115. Original documents should not be submitted because they become part of the Associate office’s file and will not be returned.

Analysis of material facts (4) Analysis of material facts. When submitting any document with a Form 3115 or in a supplemental letter, the taxpayer must explain and provide an analysis of all material facts in the document (rather than merely incorporating the document by reference). The analysis of the facts must include their bearing on the requested change in accounting method, specifying the provisions that apply.

Same issue in an earlier return (5) Information regarding whether same issue is in an earlier return. A Form 3115 must state whether, to the best of the knowledge of both the taxpayer and the taxpayer’s representative, any return of the taxpayer (or any return of a current or former consolidated group in which the taxpayer is or was a member) in which the taxpayer used the accounting method being changed is under examination, before Appeals, or before a federal court. See Rev. Proc. 97–27 and Rev. Proc. 2002–9, both as modified and amplified by Rev. Proc. 2002–19.

Issue previously submitted or currently pending

Statement identifying pending legislation

(6) Statement regarding prior requests for a change in accounting method and other pending requests.

(a) Other requests for a change in accounting method within the past five years. A Form 3115 must state, to the best of the knowledge of both the taxpayer and the taxpayer’s representatives, whether the taxpayer (or a related taxpayer within the meaning of § 267 or a member of a current or former affiliated group of which the taxpayer is or was a member within the meaning of § 1504) or a predecessor filed or is currently filing any request for a change in accounting method within the past five years (including the year of the requested change).

If the statement is affirmative, for each separate trade or business, give a description of each request and the year of change and whether consent was obtained. If any application was withdrawn, not perfected, or denied, or if a Consent Agreement was sent to the taxpayer but was not signed and returned to the Associate office, or if the change was not made in the requested year of change, give an explanation.

(b) Any other pending request(s). A Form 3115 must state, to the best of the knowledge of both the taxpayer and the taxpayer’s representatives, whether the taxpayer (or a related taxpayer within the meaning of § 267 or a member a current or former affiliated group of which the taxpayer is or was a member within the meaning of § 1504) or a predecessor currently have pending (including any concurrently filed request) any request for a private letter ruling, a change in accounting method, or a technical advice.

If the statement is affirmative, for each request, give the name(s) of the taxpayer, identification number(s), the type of request (private letter ruling, request for change in accounting method, or request for technical advice), and the specific issues in the request.

(7) Statement identifying pending legislation. At the time the taxpayer files an advance consent Form 3115, the taxpayer must identify any pending legislation that may affect the proposed change in accounting method. In addition, if legislation is introduced after the request is filed but before a change in accounting method letter ruling is issued, the taxpayer must so notify the Associate office.

Authorized representatives (8) Authorized representatives. To appear before the Service in connection with a request for a change in accounting method, the taxpayer’s authorized representative must be an attorney, a certified public accountant, an enrolled agent, an enrolled actuary, a person with a “Letter of Authorization,” an employee, general partner, bona fide officer, administrator, trustee, etc., or a foreign representative, as described in section 7.01(13) of this revenue procedure.

Power of attorney and declaration of representative

(9) Power of attorney and declaration of representative. Any authorized representative, whether or not enrolled to practice, must comply with Treasury Department Circular No. 230,

Sec. 9.03 January 5, 2004 32 2004-1 I.R.B.

which provides the rules for practice before the Service, and the conference and practice requirements of the Statement of Procedural Rules, which provide the rules for representing a taxpayer before the Service. See section 7.01(14) of this revenue procedure.

Penalties of perjury statement (10) Penalties of perjury statement

(a) Format of penalties of perjury statement. A Form 3115, and any change to a Form 3115 submitted at a later time, must be accompanied by the following declaration: “Under penalties of perjury, I declare that I have examined this application, including accompa- nying schedules and statements, and to the best of my knowledge and belief, the applica- tion contains all the relevant facts relating to the application, and it is true, correct, and complete.”

See section 9.08(3) of this revenue procedure for the penalties of perjury statement required for submissions of additional information.

(b) Signature by taxpayer. A Form 3115 must be signed by, or on behalf of, the taxpayer requesting the change by an individual with authority to bind the taxpayer in such matters. For example, an officer must sign on behalf of a corporation, a general partner on behalf of a state law partnership, a member-manager on behalf of a limited liability company, a trustee on behalf of a trust, or an individual taxpayer on behalf of a sole proprietorship. If the taxpayer is a member of a consolidated group, a Form 3115 should be submitted on behalf of the taxpayer by the common parent and must be signed by a duly authorized officer of the common parent. See the signature requirements set forth in the instructions for the current Form 3115 regarding those who are to sign. See also section 8.08 of Rev. Proc. 97–27 and section 6.02(5) of Rev. Proc. 2002–9. A stamped signature or faxed signature is not permitted.

(c) Signature by preparer. Declaration of preparer (other than the taxpayer) is based on all information of which the preparer has any knowledge.

Additional procedural information required in certain circumstances

Power of attorney used to indicate recipient of original and copy of correspondence

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(1) To indicate recipient of original or copy of change in accounting method correspon- dence. Unless the most recent power of attorney provides otherwise, the Service will send the original of the change in accounting method letter ruling and other related correspondence to the taxpayer and a copy to the taxpayer’s representative. In this case, the change in accounting method letter ruling and other related correspondence are addressed to the taxpayer. It is preferred that Form 2848, Power of Attorney and Declaration of Representative, be used to provide the representative’s authority. See section 7.02(2) of this revenue procedure for how to designate alternative routings of the letter ruling and other correspondence.

Expedited handling (2) To request expedited handling. The Associate office ordinarily processes advance consent Forms 3115 in order of the date received. A taxpayer who has a compelling need to have an advance consent Form 3115 processed on an expedited basis, may request expedited handling. See section 7.02(4) of this revenue procedure for procedures.

Facsimile transmission (fax) of any document to the taxpayer or taxpayer’s authorized representative

(3) To receive the change in accounting method letter ruling or any other correspon- dence related to a Form 3115 by facsimile transmission (fax). If the taxpayer wants a copy of the change in accounting method letter ruling or any other correspondence related to a Form 3115, such as a request for additional information, faxed to the taxpayer or the taxpayer’s authorized representative, the taxpayer must submit a written request to fax the letter ruling or related correspondence, preferably as part of the Form 3115. The request may be submitted at a later date, but must be received prior to the mailing of correspondence other than the letter ruling and prior to the signing of the change in accounting method letter ruling.

The request to have correspondence relating to the Form 3115 faxed to the taxpayer must contain the fax number of the taxpayer or the taxpayer’s authorized representative to whom the correspondence is to be faxed.

Sec. 9.04 2004-1 I.R.B. 33 January 5, 2004

A document other than the change in accounting method letter ruling will be faxed by a branch representative. The change in accounting method letter ruling may be faxed by either a branch representative or the Docket, Records, and User Fee Branch of the Legal Processing Division of the Office of Associate Chief Counsel (Procedure and Administration) (CC:PA:LPD:DRU).

For purposes of § 301.6110–2(h), a change in accounting method letter ruling is not issued until the change in accounting method letter ruling is mailed.

Requesting a conference (4) To request a conference. The taxpayer must complete the appropriate line on the Form 3115 to request a conference of right, or request a conference in a later written communication, if an adverse response is contemplated by the Associate office. See section 8.10 of Rev. Proc. 97–27, section 10.03 of Rev. Proc. 2002–9, and sections 10.01, 10.02 of this revenue procedure.

Associate office address to send Forms 3115

.05 Associate office address to send Forms 3115. Submit the original Form 3115, in the case of an advance consent Form 3115, or the national office copy of the Form 3115, in the case of an automatic change request, as follows:

(a) Associate office mailing address if private delivery service is not used. If a private delivery service is not used, a taxpayer, other than an exempt organization, must send the original completed Form 3115 and the required user fee (in the case of an advance consent Form 3115) or the national office copy of the completed Form 3115 (in the case of an automatic change request) to:

Commissioner of Internal Revenue Attention: [insert either “CC:PA:LPD:DRU” for an advance consent Form 3115 or “CC:ITA-Automatic Ruling Branch” for an automatic change request] P.O. Box 7604 Benjamin Franklin Station Washington, D.C. 20044

An exempt organization must send the original completed Form 3115 and the required user fee (in the case of an advance consent Form 3115) or the national office copy of the completed Form 3115 (in the case of an automatic change Form 3115) to:

Internal Revenue Service Tax Exempt & Government Entities Attention: TEGE:EO P.O. Box 27720 McPherson Station Washington, D.C. 20038

(b) Mailing address if private delivery service is used. If a private delivery service is used, a taxpayer, other than an exempt organization, must send the original completed Form 3115 and the required user fee (in the case of an advance consent Form 3115) or the national office copy of the completed Form 3115 (in the case of an automatic change request) to:

Sec. 9.04 January 5, 2004 34 2004-1 I.R.B.

A Form 3115 must not be submitted by fax

Controls Form 3115 and refers it to the appropriate Associate Chief Counsel’s office

Internal Revenue Service Attn: [insert either “CC:PA:LPD:DRU, Room 5336” for an advance consent Form 3115 or “CC:ITA (Automatic Rulings Branch)” for an automatic change request] 1111 Constitution Ave., N.W. Washington, D.C. 20038

If a private delivery service is used, an exempt organization must send the original completed Form 3115 and the required user fee (in the case of an advance consent Form 3115) or the national office copy of the completed Form 3115 (in the case of an automatic change request) to:

Internal Revenue Service Tax Exempt & Government Entities Attn: TEGE:EO 1750 Pennsylvania Ave., N.W. Washington, D.C. 20038

(c) Address if hand-delivered to the IRS Courier’s desk. For taxpayers other than an exempt organization, the original completed Form 3115 and the required user fee (in the case of an advance consent Form 3115) or the national office copy of the completed Form 3115 (in the case of an automatic change request), may be hand delivered between the hours of 8:00 a.m. and 4:00 p.m. to the courier’s desk at the loading dock (located behind the 12 ^th Street security station) of 1111 Constitution Ave., N.W., Washington D.C. A receipt will be given at the courier’s desk. The package should be addressed to:

Courier’s Desk Internal Revenue Service Attn: CC:PA:LPD:DRU, Room 5336 1111 Constitution Ave., N.W. Washington, D.C. 20224

.06 A completed Form 3115 must not be submitted by fax.

.07 An advance consent Form 3115 is controlled by the Legal Processing Division staff of the Associate Chief Counsel (Procedure and Administration) upon receipt if the required user fee is submitted with the Form 3115. Once controlled, the Form 3115 is forwarded to the appropriate Associate Chief Counsel’s office for assignment and processing.

Additional information .08

Incomplete Form 3115 (1) Incomplete Form 3115

(a) Advance consent Form 3115 — 21 day rule. In general, for an advance consent Form 3115, additional information requested by the Associate office and additional information furnished to the Associate office by telephone or fax must be furnished in writing within 21 calendar days from the date of the information request. The Associate office may impose a shorter reply period for a request for additional information made after an initial request. See section 10.06 of this revenue procedure for the 21-day rule for submitting information after any conference.

(b) Automatic change request — 30 day rule. In general, for an automatic change in accounting method request, additional information requested by the Associate office, and additional information furnished to the Associate office by telephone or fax, must be furnished

Sec. 9.08 2004-1 I.R.B. 35 January 5, 2004

in writing within 30 calendar days from the date of the information request. The Associate office may impose a shorter reply period for a request for additional information made after an initial request. See section 10.06 of this revenue procedure for the 21-day rule for submitting information after any conference with the Associate office.

Extension of reply period (2) Request for extension of reply period.

(a) Advance consent Form 3115. For an advance consent Form 3115, an additional period, not to exceed 15 days, to furnish information may be granted to a taxpayer. Any request for an extension of time must be made in writing and submitted prior to the last day of the original reply period. If unusual circumstances close to the end of the 21-day period make a written request impractical, the taxpayer should notify the Associate office within the 21-day period that there is a problem and that the written request for extension will be coming soon. An extension of the 21-day period will be granted only if approved by a branch reviewer. An extension of the 21-day period ordinarily will not be granted to furnish information requested on Form 3115. The taxpayer will be told promptly, and later in writing, of the approval or denial of the requested extension. If the extension request is denied, there is no right of appeal.

(b) Automatic change request. For an automatic change in accounting method request, an additional period, not to exceed 30 days, to furnish information may be granted to a taxpayer. Any request for an extension of time must be made in writing and submitted prior to the last day of the original reply period. If unusual circumstances close to the end of the 30-day period make a written request impractical, the taxpayer should notify the Associate office within the 30-day period that there is a problem and that the written request for extension will be coming soon. An extension of the 30-day period will be granted only if approved by a branch reviewer. An extension of the 30-day period ordinarily will not be granted to furnish information requested on Form 3115. The taxpayer will be told promptly, and later in writing, of the approval or denial of the requested extension. If the extension request is denied, there is no right of appeal.

Penalties of perjury statement for additional information

Identifying information included in additional information

Faxing information request and additional information

Address to send additional information

(3) Penalties of perjury statement. Additional information submitted to the Associate office must be accompanied by the following declaration: “Under penalties of perjury, I declare that I have examined this information, including accompanying documents, and, to the best of my knowledge and belief, the information contains all the relevant facts relating to the request for the information, and such facts are true, correct, and complete.” This declaration must be signed in accordance with the requirements in section 9.03(10)(b) of this revenue procedure.

(4) Identifying information. The additional information should also include the name, office symbols, and room number of the Associate office representative who requested the information, and the taxpayer’s name and the case control number, which the Associate office representative can provide.

(5) Faxing information request and additional information. To facilitate prompt action on a change in accounting method ruling request, taxpayers are encouraged to request that the Associate office request additional information by fax. See section 9.04(3) of this revenue procedure.

Taxpayers also are encouraged to submit additional information by fax as soon as the information is available. The Associate office representative who requests additional information can provide a telephone number to which the information can be faxed. A copy of the requested information and an original signed penalties of perjury statement also must be mailed or delivered to the Associate office.

(6) Address to send additional information.

(a) Address if private delivery service not used. For a request for change in accounting method under the jurisdiction of the Associate Chief Counsel (Income Tax and Accounting), if a private delivery service is not used, the additional information should be sent to:

Sec. 9.08 January 5, 2004 36 2004-1 I.R.B.

Internal Revenue Service ADDITIONAL INFORMATION Attn: [Name, office symbols, and room number of the Associate office representative who requested the information] P.O. Box 14095 Ben Franklin Station Washington, D.C. 20044

For a request for change in accounting method for an exempt organization, if a private delivery service is not used, the additional information should be sent to:

Internal Revenue Service Tax Exempt & Government Entities P.O. Box 27720 McPherson Station Washington, D.C. 20038

For any other request for change in accounting method, if a private delivery service is not used, the additional information should be sent to:

Internal Revenue Service ADDITIONAL INFORMATION Attn: [Name, office symbols, and room number of the Associate office representative who requested the information] P.O. Box 7604 Ben Franklin Station Washington, D.C. 20044

(b) Address if private delivery service is used.

For a request for a change in accounting method for other than an exempt organization, if a private delivery service is used, the additional information should be sent to:

Internal Revenue Service ADDITIONAL INFORMATION Attn: [Name, office symbols, and room number of the Associate office representative who requested the information] 1111 Constitution Ave., N.W. Washington, D.C. 20224

For a request for change in accounting method for an exempt organization, if a private delivery service is used the additional information should be sent to:

Internal Revenue Service Tax Exempt & Government Entities 1750 Pennsylvania Ave., N.W. Washington, D.C. 20038

Sec. 9.08 2004-1 I.R.B. 37 January 5, 2004

Failure to timely submit additional information

Circumstances in which the taxpayer must notify the Associate office

Determines if proposed accounting method can be modified to obtain favorable letter ruling

Near the completion of processing the Form 3115, advises the taxpayer if the Associate office will rule adversely and offers the taxpayer the opportunity to withdraw Form 3115

Advance consent Form 3115 may be withdrawn or Associate office may decline to issue a change in accounting method letter ruling

(7) If taxpayer does not timely submit additional information.

(a) Advance consent Form 3115. In the case of an advance consent Form 3115, if the required information is not furnished to the Associate office within the reply period, the Form 3115 will not be processed and the case will be closed. The taxpayer or authorized representative will be so notified in writing.

(b) Automatic change request. In the case of an automatic change in accounting method request, if the required information is not furnished to the Associate office within the reply period, the request does not qualify for the automatic consent procedure. In such a case, the Associate office will notify the taxpayer that consent to make the change in accounting method is not granted.

(c) Submitting the additional information at a later date. If the taxpayer wants to submit the additional information at a later date, the taxpayer must submit it with a new completed Form 3115 (and user fee, if applicable) for a year of change for which such new Form 3115 is timely filed under the applicable change in accounting method procedure.

.09 For an advance consent Form 3115, the taxpayer must promptly notify the Associate office if, after the Form 3115 is filed but before a change in accounting method letter ruling is issued, the taxpayer knows that —

(1) an examination of the present or proposed accounting method has been started by a field office;

(2) legislation that may affect the change in accounting method has been introduced ( see section 9.03(7) of this revenue procedure); or

(3) another letter ruling request (including another Form 3115) has been submitted by the taxpayer (or a related party within the meaning of § 267 or a member of an affiliated group of which the taxpayer is a member within the meaning of §1504).

.10 If a less than fully favorable change in accounting method letter ruling is indicated, the branch representative will tell the taxpayer whether minor changes in the proposed accounting method would bring about a favorable ruling. The branch representative will not suggest precise changes that materially alter a taxpayer’s proposed accounting.

.11 Generally, after the conference of right is held (or offered, in the event no conference is held) and before issuing any change in accounting method letter ruling that is adverse to the requested change in accounting method, the taxpayer will be offered the opportunity to withdraw the Form 3115. See section 9.12 of this revenue procedure. Unless an extension is granted, if the taxpayer or the taxpayer’s representative does not notify the branch representative of a decision to withdraw the Form 3115 within 10 days of the notification, the adverse change in accounting method letter ruling will be issued. Ordinarily, the user fee (in the case of an advance consent Form 3115) will not be refunded for a Form 3115 that is withdrawn.

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(1) In general. A taxpayer may withdraw an advance consent Form 3115 at any time before the change in accounting method letter ruling is signed by the Associate office. The Form 3115, correspondence, and any documents relating to the Form 3115 that is withdrawn or for which the Associate office declines to issue a letter ruling will not be returned to the taxpayer. See section 9.03(3) of this revenue procedure. In appropriate cases, the Service may publish its conclusions in a revenue ruling or revenue procedure.

(2) Notification of appropriate Service official. If a taxpayer withdraws or the Associate office declines to grant (for any reason) a request to change from or to an improper accounting method, the Associate office will notify, by memorandum, the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer’s tax return and the Change in Method of Accounting Technical Advisor, and may give its views on the issues in the request to the Service official to consider in any later examination of the return.

Sec. 9.08 January 5, 2004 38 2004-1 I.R.B.

How to check status of a pending Form 3115

Is not bound by informal opinion expressed

Single letter ruling issued to a consolidated group for qualifying identical change in accounting method

Letter ruling ordinarily not issued for one of two or more interrelated items or submethods

If the memorandum to the Service official provides more than the fact that the request was withdrawn and the Associate office was tentatively adverse, or that the Associate office declines to grant a change in accounting method, the memorandum may constitute Chief Counsel Advice, as defined in § 6110(i)(1), subject to disclosure under § 6110.

(3) Refund of user fee. Ordinarily, the user fee will not be returned for an advance consent Form 3115 that is withdrawn. See section 15.10 of this revenue procedure for information regarding refunds of user fees.

.13 The taxpayer or the taxpayer’s authorized representative may obtain information regarding the status of an advance consent Form 3115 by calling the person whose name and telephone number are shown on the acknowledgement of receipt of the Form 3115.

.14 The Service will not be bound by any informal opinion expressed by the branch representative or any other Service representative, and such an opinion cannot be relied upon as a basis for obtaining retroactive relief under the provisions of § 7805(b).

.15 For an advance consent Form 3115 qualifying for the user fee provided in paragraph (A)(5)(b) of Appendix A of this revenue procedure for identical accounting method changes, the Associate office generally will issue a single letter ruling on behalf of all affected members of the consolidated group.

.16 If two or more items or submethods of accounting are interrelated, the Associate office ordinarily will not issue a letter ruling on a change in accounting method involving only one of the items or submethods.

Consent Agreement .17 Ordinarily, for an advance consent Form 3115, the Commissioner’s permission to change a taxpayer’s accounting method is set forth in a letter ruling (original and a Consent Agreement copy). If the taxpayer agrees to the terms and conditions contained in the change in accounting method letter ruling, the taxpayer must sign and date the Consent Agreement copy of the letter ruling in the appropriate space. The Consent Agreement copy must not be signed by the taxpayer’s representative. The signed copy of the letter ruling will constitute an agreement (Consent Agreement) within the meaning of § 1.481–4(b) of the regulations. The signed Consent Agreement must be returned to the Associate office within 45 days. In addition, a copy of the signed Consent Agreement copy of the change in accounting method letter ruling must be attached to the taxpayer’s income tax return for the year of change. See section 8.11 of Rev. Proc. 97–27. If the taxpayer has filed its income tax return for the year of change before the ruling has been received and the consent agreement has been signed and returned, the copy of the signed consent agreement copy should be attached to the amended return for the year of change that the taxpayer files to implement the change in accounting method.

Sends a copy of the change in accounting method letter ruling to appropriate Service official

Consent to change an accounting method may be relied on subject to limitations

.18 The Associate office will send a copy of each change in accounting method letter ruling, whether favorable or adverse, to the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer’s tax return.

.19 A taxpayer may rely on a change in accounting method letter ruling received from the Associate office subject to certain conditions and limitations. See sections 9, 10, and 11 of Rev. Proc. 97–27, as modified and amplified by Rev. Proc. 2002–19.

A qualifying taxpayer complying timely with an automatic change request procedure may rely on the consent of the Commissioner as provided in the automatic change request procedure to change the taxpayer’s accounting method, subject to certain conditions and limitations. See, in general, sections 6.01, 7 and 8 of Rev. Proc. 2002–9, as modified and amplified by Rev. Proc. 2002–19. The Associate office may review a Form 3115 filed under an automatic change request procedure and will notify the taxpayer if additional information is needed or if consent is not granted to the taxpayer for the requested change. See section 10 of Rev. Proc. 2002–9. Further, the IRS director having jurisdiction over the taxpayer’s return may review the Form 3115. See section 9 of Rev. Proc. 2002–9.

Sec. 9.19 2004-1 I.R.B. 39 January 5, 2004

Change in accounting method letter ruling will not apply to another taxpayer

Associate office discretion to permit requested change in accounting method

List of automatic change in accounting method request procedures

.20 A taxpayer may not rely on a change in accounting method letter ruling issued to another taxpayer. See § 6110(k)(3).

.21 The Associate office reserves the right to decline to process any advance consent Form 3115 in situations in which it would not be in the best interest of sound tax administration to permit the requested change. In this regard, the Associate office will consider whether the change in method of accounting would clearly and directly frustrate compliance efforts of the Service in administering the income tax laws. See section 8.01 of Rev. Proc. 97–27.

.22 For requests to change an accounting method, see the following automatic change request procedures published. A taxpayer complying timely with an automatic change request procedure will be deemed to have obtained the consent of the Commissioner to change the taxpayer’s accounting method.

The automatic change request procedures for obtaining a change in accounting method include:

(1) Rev. Proc. 2002–9, 2002–1 C.B. 327, as modified and clarified by Announcement 2002–17, 2002–1 C.B. 561, as modified and amplified by Rev. Proc. 2002–19, 2002–1 C.B. 696, as amplified, clarified and modified by Rev. Proc. 2002–54, 2002–2 C.B. 432, and as modified by Rev. Proc. 2003–45, 2003–2 C.B. 11, which, for most (but not all) types of changes provided therein, requires a completed Form 3115. Rev. Proc. 2002–9 applies to the accounting method changes described in the Appendix of Rev. Proc. 2002–9 involving §§ 56, 61, 77, 162, 166, 167, 168, 171, 174, 197, 263, 263A, 267, 404, 446, 448, 451, 454, 455, 458, 460, 461, 471, 472, 475, 585, 832, 846, 861, 985, 1272, 1273, 1278, 1281, 1286, and former § 168.

(2) The following automatic change request procedures modify and amplify Rev. Proc. 2002–9 in that they add the following changes to the list of accounting method changes listed in the Appendix of this revenue procedure:

Rev. Proc. 2002–27, 2002–1 C.B. 802 (section 168 — depreciation of original and replacement tires of certain vehicles);

Rev. Proc. 2004–11, 2004–3 I.R.B. , (revised sections 2.01 and 2.02 and 2B of the Appendix and added section 2.05 to the Appendix of Rev. Proc 2002–9);

Rev. Proc. 2003–50, 2003–29 I.R.B. 119 (sections 168(k) and 1400L(b)—additional relief);

Rev. Rul. 2003–54, 2003–1 C.B. 982 (section 168 — depreciation of gas pump canopies);

Rev. Rul. 2003–81, 2003–30 I.R.B. 126 (section 168 — depreciation of utility assets);

Rev. Proc. 2003–63, 2003–32 I.R.B. 304 (section 168 — depreciation of cable TV fiber optics);

Rev. Proc. 2002–65, 2002–2 C.B. 700 (section 263 - change to the track maintenance allowance method for the first or second taxable year ending on or after December 31, 2001);

Rev. Rul. 2002–9, 2002–1 C.B. 614 (section 263A — impact fees incurred in connection with construction of a new residential rental building);

Rev. Rul. 2002–46, 2002–2 C.B. 117, as modified by Rev. Rul. 2002–73, 2002–2 C.B. 805 (section 404 — grace period contributions);

Rev. Proc. 2002–28, 2002–1 C.B. 815 (section 446 — certain small businesses who seek to change to the cash method and/or to a method of accounting for inventoriable items as materials and supplies that are not incidental);

Sec. 9.20 January 5, 2004 40 2004-1 I.R.B.

Rev. Proc. 2002–36, 2002–1 C.B. 993 (section 451 - certain taxpayers who purchase vehicles subject to leases who seek to change to the capital cost reduction (CCR) method);

Rev. Rul. 2003–3, 2003–1 C.B. 252 (section 451 — accrual method taxpayer with state or local income or franchise tax refund);

Rev. Proc. 2002–17, 2002–1 C.B. 676 (section 471 — certain automobile dealers seeking to change to the replacement cost method for vehicle parts inventory);

Rev. Proc. 2003–20, 2003–1 C.B. 445 (section 471 — valuation of remanufactured motor vehicle core parts);

Rev. Proc. 2002–46, 2002–2 C.B. 105 (section 832 — certain insurance companies seeking to change to safe harbor method for premium acquisition expenses); and

Rev. Proc. 2002–74, 2002–2 C.B. 980 (section 846 — insurance companies other than life insurance companies computing discounted unpaid losses).

(3) The following automatic change request procedures, which require a completed Form 3115, provide both the type of accounting method change that may be made automatically and the procedures under which such change must be made:

Regs. § 1.166–2(d)(3) (bank conformity for bad debts);

Regs. § 1.448–1 (to an overall accrual method for the taxpayer’s first taxable year it is subject to Code section 448);

Regs. § 1.448–2T and Notice 88–51 (nonaccrual experience method);

Regs. § 1.458–1 and –2 (exclusion for certain returned magazines, paperbacks, or records);

Rev. Proc. 97–43, 1997–2 C.B. 494 (section 475-electing out of certain exemptions from securities dealer status); and

Rev. Proc. 91–51, 1991–2 C.B. 779 (section 1286-certain taxpayers under examination that sell mortgages and retain rights to service the mortgages).

(4) The following automatic change request procedures, which do not require a completed Form 3115, provide the type of accounting method change that may be made automatically and also provide the procedures under which such change must be made:

Notice 96–30, 1996–1 C.B 378 (section 446-change to comply with Statement of Financial Accounting Standards No. 116);

Rev. Proc. 92–29, 1992–1 C.B. 748 (section 461-change in real estate developer’s method for including costs of common improvements in the basis of property sold);

Rev. Proc. 98–58, 1998–2 C.B. 710 (certain taxpayers seeking to change to the installment method of accounting under ( 453 for alternative minimum tax purposes for certain deferred payment sales contracts relating to property used or produced in the trade or business of farming);

Regs. § 1.472–2 (taxpayers changing to the last-in, first-out (LIFO) inventory method);

Code § 585(c) and Regs. §§ 1.585–6 and 1.585–7 (large bank changing from the reserve method of section 585); and

Rev. Proc. 92–67, 1992–2 C.B. 429 (election under section 1278(b) to include market discount in income currently or election under section 1276(b) to use constant interest rate to determine accrued market discount).

Sec. 9.22 2004-1 I.R.B. 41 January 5, 2004

Other sections of this revenue procedure that are applicable to a Form 3115

.23 In addition to this section 9, the following sections of this revenue procedure are applicable to Forms 3115:

1 (purpose of Rev. Proc. 2004–1);

2.01 (definition of “letter ruling”);

2.02 (definition of “closing agreement”);

2.05 (oral guidance);

3.01 (issues under the jurisdiction of the Associate Chief Counsel (Corporate));

3.02 (issues under the jurisdiction of the Associate Chief Counsel (Financial Institutions and Products));

3.03 (issues under the jurisdiction of the Associate Chief Counsel (Income Tax and Accounting));

3.04 (issues under the jurisdiction of the Associate Chief Counsel (International));

3.05 (issues under the jurisdiction of the Associate Chief Counsel (Passthroughs and Special Industries));

3.07 (issues under the jurisdiction of the Associate Chief Counsel (Tax Exempt and Governmental Entities));

6.02 (letter rulings ordinarily not issued in certain areas because of the factual nature of the problem);

6.05 (letter rulings generally not issued to business associations or groups);

6.07 (letter rulings ordinarily not issued on federal tax consequences of proposed legislation);

6.09 (letter rulings not issued on frivolous issues);

6.11 (letter rulings not issued on alternative plans or hypothetical situation);

7.01(1) (statement of facts and other information);

7.01(8) (statement of supporting authorities);

7.01(13) (authorized representatives);

7.01(14) (power of attorney and declaration of representative);

7.02(2) (power of attorney used to indicate recipient of original or copy of correspondence);

7.02(4) (expedited handling);

10 (scheduling conferences);

15 (user fees);

16 (significant changes to Rev. Proc. 2003–1);

17 (effect of Rev. Proc. 2004–1 on other documents);

18 (effective date of this revenue procedure);

Appendix A (schedule of user fees); and

Appendix E (revenue procedures and notices regarding letter ruling requests relating to specific Code sections and subject matters).

Sec. 9.23 January 5, 2004 42 2004-1 I.R.B.