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Washington Tax Alert, May 19, 2017 (Amending Form 3115)

Washington Tax Alert from Don Barnes, dbarnes@washingtontaxlaw.com
May 19, 2017

The Service’s administrative procedures for making accounting method changes generally have not addressed how a taxpayer can amend Form 3115 (Application for Change in Accounting Method) after it has been submitted.

The Service’s customary practice has been to allow a taxpayer to revise and amend an accounting method change application that requires the National Office’s advance consent while the application is pending with the National Office.

However, there was no guidance in Rev. Proc. 2011-14 (and earlier revenue procedures) regarding how a taxpayer can amend or revise an accounting method change application filed under the automatic consent procedures.  Rev. Proc. 2015-13 made a significant change in this regard by adding the following provision:

"If a taxpayer submits additional correspondence regarding its Form 3115 filed under the automatic change procedures (for example, a revised section 481(a) adjustment or power of attorney), it must attach a copy of the additional correspondence behind a copy of page 1 of the previously filed Form 3115 and submit it to the IRS in Ogden, UT."

At the American Bar Association Tax Section meeting in Washington last week, an Office of Chief Counsel lawyer addressed how a taxpayer should implement changes to an automatic consent accounting method change application if the taxpayer has filed the duplicate copy of the application, but has not yet filed the original application with its tax return for the year of change.

The IRS lawyer indicated that an automatic consent accounting method change application is not considered filed until both the duplicate and original Form 3115 have been submitted.

In addition, the IRS lawyer indicated that the duplicate Form 3115 must be amended to conform to the original, and recommended that taxpayers submit an amended duplicate Form 3115 referencing the previously submitted form.

Law Offices of Donald A. Barnes, PLLC
818 Connecticut Avenue, N.W.
Suite 1200
Washington, DC  20006
Telephone: (202) 728-4407
Cell: (202) 360-0275
E-mail: dbarnes@washingtontaxlaw.com
Website: www.washingtontaxlaw.com