SECTION 2. BACKGROUND

.01 On January 5, 2004, the Internal Revenue Service and Treasury Department published final regulations in the Federal Register (T.D. 9107, 2004–1 C.B. 447

[69 FR 436]). Section 1.263(a)–4 prescribes the extent to which taxpayers must

by § 1.263A–2T(e)(2) through (4), for obtaining the Commissioner’s automatic consent to a change in accounting method.

.10 Pursuant to the foregoing provisions, a taxpayer changing its method of accounting to comply with § 1.263A–1T or 1.263A–2T as set forth in T.D. 9217 for its first taxable year ending on or after August 2, 2005, is required to use the automatic consent procedures of Rev. Proc. 2002–9 (as modified by § 1.263A–1T(k) or 1.263A–2T(e), whichever is applicable) to obtain the consent of the Commissioner to change its method of accounting. Some taxpayers contemplating such accounting method changes are uncertain whether their proposed methods of accounting will comply with the regulations under § 263A, and have requested that the Internal Revenue Service allow for advance review of their requested accounting methods.

.11 The Service has determined that it is in the best interest of sound tax administration to allow taxpayers changing their methods of accounting to comply with § 1.263A–1T or 1.263A–2T for their first taxable years ending on or after August 2, 2005, to utilize either the advance consent procedures of Rev. Proc. 97–27 or the automatic consent procedures of Rev. Proc. 2002–9. Therefore, when §§ 1.263A–1T and 1.263A–2T are issued as final regulations, the final regulations will allow taxpayers to use the advance consent procedures for their first taxable year ending on or after August 2, 2005. This revenue procedure is being issued in advance of the final regulations and the rules provided herein are consistent with the rules that will be provided in the final regulations.