SECTION 2. BACKGROUND

.01 On March 24, 2004, the Internal Revenue Service released Rev. Proc. 2004–23. Rev. Proc. 2004–23 provides procedures under which certain taxpayers may obtain automatic consent for the taxpayer’s first taxable year ending on or after December 31, 2003, to change to a method of accounting provided in §§ 1.263(a)–4, 1.263(a)–5, and 1.167(a)–3(b) of the Income Tax Regulations. As a term and condition of obtaining this automatic consent, taxpayers must file Form 3115, Application for Change in Accounting Method, and provide therein certain information specifically required by Rev. Proc. 2004–23. .02 Section 6.02 of Rev. Proc. 2004–23 provides transition rules applicable to certain taxpayers that filed Form 3115 prior to April 26, 2004, and did not include in the Form 3115 all of the information required by Rev. Proc. 2004–23. In lieu of preparing and filing a new Form 3115, these transition rules permit taxpayers to prepare and file a written statement that includes all of the necessary information that was not included in the original Form 3115. Section 6.02(2) of Rev.

Proc. 2004–23 requires taxpayers to submit the written statement, with an attached copy of page 1 of the original Form 3115 filed by the taxpayer, to the national office within the timely filing requirements of section 6.02(3)(a) (including the automatic extension period described in section 6.02(3)(b)(i)) of Rev. Proc. 2002–9, 2002–1 C.B. 327, as modified and clarified by Announcement 2002–17, 2002–1 C.B. 561, modified and amplified by Rev. Proc. 2002–19, 2002–1 C.B. 696, and amplified, clarified, and modified by Rev. Proc. 2002–54, 2002–2 C.B. 432. .03 Section 6.02(3) of Rev. Proc. 2004–23 requires taxpayers to attach the written statement and a copy of the original Form 3115 to the taxpayer’s federal income tax return for the taxpayer’s —

(i) first taxable year ending on or after December 31, 2003, or

(ii) second taxable year ending on or after December 31, 2003, if the taxpayer prior to April 26, 2004, has filed the taxpayer’s federal income tax return for the taxpayer’s first taxable year ending on or after December 31, 2003, that includes a Form 3115, a copy of which also has been filed with the national office, and the § 481(a) adjustment included on that return was computed correctly as described in section 5 of Rev. Proc. 2004–23.