The IRS recently released a new version of the Form 3115, "Application for Change in Accounting Method," along with 23 pages of instructions. The form was revised to better match Rev. Proc. 2015-13, which was published about a year ago and made some major changes to the terms and conditions under which taxpayers file automatic and nonautomatic method changes.
In addition, the form now requires certain automatic method changes to include a full explanation of the legal basis supporting the proposed method. The IRS said that many of the forms it receives don't include the level of detail the IRS requested in the automatic procedure under which the change was being requested. For example, a change from an impermissible to permissible method of depreciation under Section 6.01 of Rev. Proc. 2015-14 is one of the changes that require the additional detailed legal basis.
The IRS hasn't yet released transition rules for use of the revised form; however, the government recently stated publicly that it expects to do so. It is likely to be similar to the transition rules the IRS used last time, which was in 2009.
Practice tip: Until the IRS releases transition rules, we consider it appropriate for fiscal tax year 2014 filers who are relying on the old procedures in Rev. Proc. 2011-14 to continue to use the old Form 3115, as the questions better match those procedures. (Rev. Proc. 2015-13 provided transition rules that generally allowed taxpayers to continue to file 2014 tax year automatic method changes under Rev. Proc. 2011-14.) Taxpayers filing under the new procedures in Rev. Proc. 2015-13 should use the new form, as the questions on the new form better match the new procedures.
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