AICPA recommends automatic accounting method changes to IRS

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The American Institute of CPAs has submitted a set of recommendations to the Internal Revenue Service about accounting method changes.

Last year, the IRS issued Revenue Procedure 2018-31, which lists the accounting method changes for which automatic consent is given by the agency. In a letter Wednesday, the AICPA proposed several changes and modifications in the IRS’s list. They included a number of recommendations:

  • Offer audit protection to taxpayers under examination when new guidance is issued;
  • Include audit protection for any method change afforded automatic consent;
  • Add commissions to the type of compensation eligible for the automatic consent procedures for deferred compensation, including adding automatic consent for a fiscal year taxpayer changing its method to comply with Treas. Reg. section 1.83-6;
  • Provide cash method taxpayers with automatic consent to change from impermissible income or expense recognition methods to permissible methods;
  • Offer automatic consent for method changes to comply with section 451(c);
  • Provide automatic consent for an accrual method taxpayer to change from impermissible to permissible methods of applying the all-events test and economic performance for liabilities;
  • Include automatic consent for a change to properly apply the recurring item exception for eligible liabilities; and
  • Allow taxpayers to change from an impermissible to permissible method of accounting for recognizing income from tenant improvement allowances.
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Accounting methods Tax regulations Cash accounting AICPA IRS