SECTION 3. CHANGES TO REV.

PROC. 2006–12

.01 The third sentence of section 2.07 of Rev. Proc. 2006–12 is modified to read as follows:

“Except as provided in section 3 of this revenue procedure, for any change in method of accounting to which this revenue procedure applies, a taxpayer may not file an application for a change in method of accounting under Rev. Proc. 97–27, 1997–1 C.B. 680, as modified and amplified by Rev. Proc. 2002–19, 2002–1 C.B. 696, as amplified and clarified by Rev. Proc. 2002–54, 2002–2 C.B. 432.”

.02 Section 3 of Rev. Proc. 2006–12 is modified by adding the following two sentences to the end:

“However, a taxpayer that seeks to change its method of accounting to utilize the 3 ¹ /2 month rule authorized by § 1.461–4(d)(6)(ii) or to utilize the recurring item exception authorized by § 1.461–5 for the item for which the taxpayer also seeks a change to a method of accounting provided in the final regulations may apply for both changes for the same item on an application for a change in method of accounting filed under Rev. Proc. 97–27. The terms and conditions in this revenue procedure apply to a request for a change to a method of accounting provided in the final regulations filed under Rev. Proc. 97–27.”

.03 Section 6.02 of Rev. Proc. 2006–12 is modified by adding the following two sentences to the end:

“However, instead of filing two separate applications for a change in method of accounting utilizing the 3 ¹ /2 month rule or the recurring item exception in conjunction with a change to a method provided in the final regulations, a taxpayer may apply for both changes for the same item on an application for a change in method of accounting filed under Rev. Proc. 97–27. The terms and conditions in this revenue procedure apply to a request for a change to a method of accounting provided in the

2006–38 I.R.B. 500 September 18, 2006