AICPA recommends automatic accounting method changes to IRS

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.