IRS releases revised Form 3115 and instructions
TAX ALERT |
In January 2016, the IRS released the final version of the December 2015 revision of Form 3115, Application for Change in Accounting Method, and its instructions. The final release of the form and instructions provides minor changes to the previous drafts of the form and instructions, released in July 2015 and September 2015, respectively. After the IRS released the draft Form 3115 in July, taxpayers had concerns that the IRS would now require a legal basis for all accounting method changes filed under the automatic method change procedures, similar to the requirements under the non-automatic procedures. The final release of the Form 3115 and instructions maintains the legal basis requirement, but only for certain automatic changes (list provided in the instructions).
The December 2015 revision of Form 3115 provides the ability to list multiple automatic method change numbers on a single Form 3115 (for multiple method changes that are permitted to be requested on one Form 3115) and also reflects the changes put forth in Rev. Proc. 2015-13, which replaced Rev. Procs. 2011-14 and 97-27. For other differences between the December 2009 Form 3115 release and the December 2015 revision, please see our previous alert.
The revised Form 3115 should be used for all accounting method changes going forward. This includes filing under Rev. Procs. 2015-13 and 2015-14 or under Rev. Proc. 2011-14 (for tax years beginning before Jan. 1, 2015). Regardless of under which guidance a taxpayer files its Form 3115, the duplicate copies of automatic change requests are to be sent to the IRS Service Center in Covington, Kentucky (requests were previously sent to Ogden, Utah). If you have already mailed a copy of a Form 3115 to Ogden, Utah or Covington, Kentucky using the prior version of Form 3115 (December 2009), the Form 3115 attached to the timely filed tax return should be a copy of the same Form 3115 filed with Ogden, Utah or Covington, Kentucky. The IRS did not provide any transition relief with the release of the new form and instructions.
Given the revisions to the procedures for requesting a change in accounting method under Rev. Proc. 2015-13 and the legal basis required for certain automatic accounting method changes, taxpayers should consult with their tax advisors to see how the changes in procedure and form impact them.