IRS Simplifies Process for
Changing Method of Accounting

WASHINGTON - The Internal Revenue Service today issued a revised procedure for taxpayers to follow when requesting permission to change their accounting method for federal income tax purposes. A change in accounting method usually involves the time when a taxpayer reports an item as income or takes it as a deduction. The new rules end many of the complexities in the five-year-old procedure they replace.

"These new rules greatly simplify the process," said IRS Commissioner Margaret Milner Richardson. "Once again, we are trying to enhance voluntary compliance with the tax laws by making the rules easier for taxpayers to follow."

The IRS asked for public comment on revising these procedures last year, and put many of the suggestions it received into the new rules. For example, the different classification categories are gone, and a single adjustment period for both positive and negative adjustments replaces the various periods in the old rules. In addition, taxpayers generally may now request a change in accounting method any time during the year, not just during the first 180 days.

The new Revenue Procedure 97-27 will be published in Internal Revenue Bulletin 1997-21, dated May 27, 1997, and will be effective May 15.

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