Different methods of accounting can reflect the current position of a company more or less accurately and have varying tax consequences. As such, it may be beneficial to change accounting methods in the normal course of business operations. To change accounting methods or the accounting treatment of a specific item, taxpayers are required to file Form 3115, Application for Change in Accounting Method, with the IRS.
Things You'll Need
- IRS Form 3115
- IRS Form 3115 Instructions
- Information and records related to the requested change in accounting method
Fill in identifying information for the filer and applicant at the top of Form 3115. This includes name, signature, identification number, principle business activity code, address, contact information, and type of applicant.
Check the box for the type of accounting change requested. Corresponding schedules are attached to Form 3115 for most methods of accounting changes. Use these schedules to provide supplemental information requested by the IRS.
Provide the designated change number for any automatic accounting change requested and answer related questions to complete Part I. The change numbers can be found in the Form 3115 Instructions.
Answer questions related to the accounting change and provide supplemental information requested in Part II of the form. Refer to the instructions as necessary.
If the applicant is filing an advance consent request, answer all applicable questions and provide information requested for filing under this procedure to complete Part III.
Review IRS publications related to Section 481(a) of the Internal Revenue Code at the IRS website.
Answer questions related to any adjustments required under Section 481(a) which apply to the change in accounting method requested to complete Part IV.
File Form 3115 and attached schedules with the IRS. Form 3115 must be filed in duplicate for an automatic change request, as explained in the Form 3115 Instructions.
Tips & Warnings
- A separate Form 3115 must be filed for each applicant seeking consent to change a method of accounting and for each requested change of accounting treatment for specific items.
- Late filing of Form 3115, or related federal tax returns, can be grounds for rejection of an Application for Change in Accounting Method. File in a timely manner for the best results.
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