SECTION 12. CHANGES TO REV.

PROC. 97–27

.01 Changes to section 3.07, Under ex- amination .

(1) Change to section 3.07(1)(a) . Section 3.07(1)(a) of Rev. Proc. 97–27 is modified, in part, to read as follows:

(a) Except as provided in sections 3.07(2) and 3.07(4) of this revenue procedure, an examination of a taxpayer with respect to a federal income tax return begins on the date the taxpayer is contacted in any manner by a representative of the Service for the purpose of scheduling any type of examination of the return. Except as provided in sections 3.07(1)(b), 3.07(1)(c), 3.07(2) and 3.07(3) of this revenue procedure, an examination ends:

(2) Change to section 3.07(1)(c) . Section 3.07(1)(c) of Rev. Proc. 97–27 is modified to read as follows:

(c) An examination resumes on the date the taxpayer (or its representative) is notified by Appeals (or otherwise) that the case has been referred to Examination for reconsideration. Further, notwithstanding sections 3.07(1)(a)(iii) and 6.01(3) of this revenue procedure, if the taxpayer is within the 120-day window period provided in section 6.01(3) of this revenue procedure, that 120-day window period ends as of the date the taxpayer is notified by Appeals (or otherwise) that the case has been referred to the examining agent(s) for reconsideration. The 120-day window period in section 6.01(3) will be available to the taxpayer in its entirety when the resumed examination ends.

(3) Change to section 3.07(2), Part- nerships and S corporations subject to TEFRA . Section 3.07(2) of Rev. Proc. 97–27 is modified, in part, to read as follows:

(2) Partnerships and S corporations subject to TEFRA . Except as provided in sections 3.07(3) and 3.07(4) of this revenue procedure, for an entity (including a limited liability company), treated as a partnership or an S corporation for federal income tax purposes, that is subject to the TEFRA unified audit and litigation provisions for partnerships and S corporations, an examination begins on the date of the notice of the beginning of an administrative proceeding sent to the Tax Matters

Partner/Tax Matters Person (TMP) and ends:

(4) Change to section 3.07(3), Taxpayer before Joint Committee on Taxation . Section 3.07(3) of Rev. Proc. 97–27 is modified to read as follows:

(3) Taxpayer before Joint Committee on Taxation . If a taxpayer is under examination (including an examination that begins on the date a taxpayer is contacted in any manner for additional information as a result of a Joint Committee on Taxation inquiry pursuant to § 6405) then, notwithstanding the performance of an act described in section 3.07(1) or 3.07(2), for purposes of this revenue procedure, the taxpayer continues to be under examination while the taxpayer has a refund or credit under review by the Joint Committee on Taxation. The examination ends on the later of (i) the performance of the applicable act described in section 3.07(1) or 3.07(2), or (ii) the date of the Service’s written notification to the taxpayer that the Joint Committee on Taxation has completed its consideration (for example, Letter 1574 (P)), or that the case has been withdrawn from consideration by the Joint Committee on Taxation. See Rev. Proc. 2005–32, 2005–1 C.B. 1206. Further, for purposes of section 6.01(5) (issue pending) of this revenue procedure, an issue is pending for a taxable year under examination if the Service has given the taxpayer written notification indicating an adjustment is being made or will be proposed with respect to the taxpayer’s method of accounting. The notification by the Service may result from an inquiry by the Joint Committee on Taxation. This notification normally will occur after the Service or the Joint Committee on Taxation has gathered information sufficient to determine that an adjustment is appropriate and justified, although the exact amount of the adjustment may not yet be determined.

.02 Changes to section 3.08, Issue un- der consideration .

(1) Change to section 3.08(2), Before an appeals office . Section 3.08(2) of Rev. Proc. 97–27, is modified to read as follows:

(2) Before an appeals office . A taxpayer’s method of accounting for an item is an issue under consideration for the taxable years before an appeals office if the

2011–4 I.R.B. 352 January 24, 2011

the national office that it will convert the Form 3115 under this revenue procedure, the national office ordinarily will return the Form 3115 to the taxpayer to make the necessary modifications to comply with the applicable provisions of this revenue procedure and will refund the user fee submitted with the Form 3115.

A taxpayer may convert a Form 3115 that is returned to the taxpayer under this section 13.02(1) to an application under Rev. Proc. 2011–14, if the taxpayer resubmits the Form 3115 with the necessary modifications, along with a copy of the national office letter sent with the returned Form 3115, to the national office or, if applicable, to the Ogden office, by the earlier of (a) the 30 ^th calendar day after the date of the Service’s letter returning the Form 3115 to the taxpayer, or (b) the date the taxpayer is required to file the copy of the application under section 6.02(3) of this revenue procedure. For purposes of the timely duplicate filing requirement in section 6.02(3) of Rev. Proc. 2011–14, the national office copy or, if applicable, the Ogden copy, of the timely resubmitted Form 3115 will be considered filed as of the date the taxpayer originally filed the Form 3115 under Rev. Proc. 97–27.

A Form 3115 filed under Rev. Proc. 97–27 before January 10, 2011, that is pending with the national office on January 10, 2011, will be disregarded for purposes of the prior 5 year change rules in sections 4.02(6) and (7) of Rev. Proc. 2011–14, in the following circumstances:

(a) the taxpayer converts the Form 3115 under this section 13.02(1); or

(b) the taxpayer withdraws the Form 3115 and files an application under Rev. Proc. 2011–14, for the same change in method of accounting for a year of change ending on or before April 30, 2011.

(2) Application filed under Rev. Proc. 2008–52 .

(a) General rule . If a taxpayer properly filed an application with the national office under Rev. Proc. 2008–52, as amplified, clarified, and modified by Rev. Proc. 2009–39, to make a change in method of accounting described in the APPENDIX of Rev. Proc. 2008–52, as amplified, clarified, and modified by Rev. Proc. 2009–39, and the application was either post-marked or received by the national office before January 10, 2011, the taxpayer makes the

(1) Change to section 6.02, Taxpayer before an appeals office . Section 6.02 of Rev. Proc. 97–27, is modified to read as follows:

.02 Taxpayer before an appeals office . A taxpayer otherwise within the scope of this revenue procedure that is before an appeals office with respect to any income tax issue may request a change in method of accounting. Further, a taxpayer not otherwise within the scope of this revenue procedure by reason of section 4.02(2) (under examination), 4.02(5) (consolidated group member) or 4.02(6) (partnerships and S corporations) that is before an appeals office with respect to any income tax issue may request a change in method of accounting if the method to be changed is an issue under consideration by the appeals office. However, the audit protection provisions of section 9 of this revenue procedure do not apply if the method of accounting to be changed is an issue under consideration by the appeals office. A taxpayer that requests to change a method of accounting under this section 6.02 must provide a copy of the Form 3115 to the appeals officer no later than the date it files the original Form 3115 with the national office.

(2) Change to section 6.03, Taxpayer before a federal court . Section 6.03 of Rev. Proc. 97–27, is modified to read as follows:

.03 Taxpayer before a federal court . A taxpayer otherwise within the scope of this revenue procedure that is before a federal court with respect to any income tax issue may request a change in method of accounting. Further, a taxpayer not otherwise within the scope of this revenue procedure by reason of section 4.02(2) (under examination), 4.02(5) (consolidated group member) or 4.02(6) (partnerships and S corporations) that is before a federal court with respect to any income tax issue may request a change in method of accounting if the method to be changed is an issue under consideration by the federal court. However, the audit protection provisions of section 9 of this revenue procedure do not apply if the method of accounting to be changed is an issue under consideration by the federal court. A taxpayer that requests to change a method of accounting under this section 6.03 must provide a copy of the Form 3115 to the counsel(s) for the

government no later than the date it files the original Form 3115 with the national office.