December 21, 2016 The IRS has extended for an additional year the waiver of the 5-year eligibility limitation on making automatic accounting method changes to comply with the tangible property regulations (“repair regulations”) generally provided in Reg. §1.263(a)-1, Reg. §1,263(a)-2, and Reg. §1.263(a)-3) (T.D. 9636 (September 19, 2013)) and certain related final MACRS regulations (T.D. 9689 (August 14, 2014)). As extended, the 5-year eligibility limitation will not apply to changes made for tax years beginning before January 1, 2017.
Comment: The 5-year eligibility limitation, which is provided in Section 5.01(1)(f) of Rev. Proc. 2015-13, I.R.B. 2015-5, 419, prohibits a taxpayer from filing a change in accounting method for an item using the automatic consent procedures if the taxpayer made or requested an accounting method change for the same item during any of the five tax years ending with the year of change. If the 5-year eligibility limitation prevents a taxpayer from using the automatic procedure, the taxpayer must file using the nonautomatic procedures described in Rev. Proc. 2015-13. The nonautomatic procedures require actual IRS consent to make the change and the payment of a significant filing fee which is not charged for automatic changes.