SECTION 5. CHANGE IN METHOD

OF ACCOUNTING

.01 Change to the NAE book safe har- bor .

(1) In general . A change in a taxpayer’s method of accounting to the NAE book safe harbor method is a change in method of accounting to which the provisions of §§ 446 and 481 and the regulations thereunder apply. A taxpayer within the scope of this revenue procedure is granted the consent of the Commissioner to change to the NAE book safe harbor method permitted under section 4 of this revenue procedure if the taxpayer complies with the applicable provisions of Rev. Proc. 2006–56 and Rev. Proc. 2011–14 (or any successor).

(2) Scope limitations . The scope limitations in section 4.02 of Rev. Proc. 2011–14 (or any successor) do not apply for a taxpayer’s first taxable year ending on or after September 28, 2011. However, if, at the time a taxpayer files a Form 3115 for that year with the national office, and the taxpayer’s NAE method is an issue under consideration for a taxable year under examination, before an appeals office, or before a federal court, then the audit protection of section 7 of Rev. Proc. 2011–14 (or any successor) does not apply. A taxpayer’s NAE method of accounting is an issue under consideration for the taxable years under examination if the taxpayer receives written notification (for example, by examination plan, information document request, or notification of proposed adjustment, or income tax examination changes) from the examining agent(s) specifically citing the treatment of the NAE method of accounting as an issue under consideration.

.02 Change in applicable financial statements and allowance for doubtful accounts .

(1) In general . A change to a taxpayer’s method for determining its allowance for doubtful accounts for its applicable financial statements is a change in method of accounting to which the provisions of § 446 and the regulations thereunder apply. A taxpayer within the scope of this revenue procedure is granted the consent of the Commissioner to change this method if the taxpayer complies with the applicable provisions of Rev. Proc. 2011–14 (or any successor) and this paragraph 5.02. An adjust

ment to a taxpayer’s estimates in determining its allowance for doubtful accounts that does not change the base or formula is not a change in the method of determining the allowance for doubtful accounts under this paragraph 5.02. For example, if a taxpayer estimates that 4% of its receivables are uncollectible in a taxable year, and using the same methodology estimates that 6% of its receivables are uncollectible in the subsequent taxable year, the adjustment to its estimate is not a change in the method of determining the allowance for doubtful accounts.

(2) Restatement of applicable financial statements . A taxpayer’s restatement of its applicable financial statements does not invalidate the taxpayer’s method of accounting or change its uncollectible amount determined under the NAE book safe harbor in earlier taxable years.

(3) Manner of making change. (a) A taxpayer makes a change in method of accounting under this paragraph 5.02 by attaching a statement to its original return for the taxable year of change (or to an amended return if under the limited relief for a late application provided in section 6.02(3)(d) of Rev. Proc. 2011–14, or any successor). The taxpayer is not required to file a copy of the statement with the national office under section 6.02(3)(a) of Rev. Proc. 2011–14 (or any successor). The statement must include the following information:

(i) The taxpayer’s name and taxpayer identification number for each applicant;

(ii) The beginning and ending dates of the year of change;

(iii) For each applicant, the type of applicable financial statement (as defined in section 4.02 of this revenue procedure) the taxpayer uses;

(iv) A description of the method the taxpayer uses to determine its allowance for doubtful accounts on its applicable financial statements before and after the change; and

(v) The designated automatic accounting method change number 35.

(b) A change under this paragraph 5.02 is made on a cut-off basis and applies only to accounts receivable earned on or after the first day of the taxable year of change. A taxpayer must continue to apply its former method to accounts receivable earned before the taxable year of change. Accord

2011–42 I.R.B. 519 October 17, 2011

(Also: Part I, §§ 62, 162, 267, 274; 1.62–2, 1.162–17, 1.267(a)–1, 1.274–5.)

Rev. Proc. 2011–47