π Rev. Proc. 2025-23 | Effective June 9, 2025
βοΈ Issued in: Internal Revenue Bulletin 2025-24
π§Ύ Applies to: Forms 3115 (Change in Accounting Method)
ποΈ Effective for tax years ending on or after: October 31, 2024
𧩠What’s Changed and Why It Matters
The IRS has streamlined and clarified the list of accounting method changes that can be made automatically β saving time, reducing paperwork, and avoiding costly procedural missteps.
π Major Highlights
| π οΈ Change Type | π What Changed | βοΈ Why It Matters |
| ποΈ Obsolete Sections Removed | Revoked outdated provisions under Code Secs. 168(j)(8), 168(l)(3)(D), 181(a)(1) | π§Ή Simplifies compliance by eliminating dead law |
| π Clarified 481(a) Adjustments | Clearly applies to βany taxable yearβ when the election was made | π§ Prevents confusion on when adjustments apply |
| ποΈ Depreciation & Interest Capitalization | Removed outdated waiver references | π‘ Updated to reflect current law and practice |
| π¦ Inventory Valuation Methods | Deleted references to obsolete proposed regs | π Eases implementation of inventory method changes |
| β‘ Foreign Income Tax + Regulated Utilities (Sec. 118(c)) | Now require non-automatic procedure | π« Can no longer use Form 3115 under automatic rules |
π Automatic vs. Non-Automatic Method Changes
| βοΈ Automatic Method Change | π Non-Automatic Method Change |
| β Fewer procedural hurdles | β³ Requires IRS consent |
| β Self-implemented with Form 3115 | πΌ Formal ruling process needed |
| β Often no user fee | π° Usually includes user fee |
ποΈ Key Effective Dates & Transition Rules
πΉ Applies to:
- Form 3115s filed on/after June 9, 2025
- For tax years ending on or after October 31, 2024
π Transition Option: Convert to Automatic
If you have a pending non-automatic change request and now qualify for the automatic method:
π£ You can convert!
π What to do:
- Notify the IRS National Office
- Deadline: By July 9, 2025
- Clearly state that you wish to convert your Form 3115 to the automatic procedures under Rev. Proc. 2015-13
πΈ Already Filed Before June 9, 2025?
| Scenario | Result |
| β Filed under previous automatic rules | You may continue for that year |
| β Didnβt file before deadline | Must follow non-automatic procedures |
| π Filed duplicates under old rules | You can choose Rev. Proc. 2024-23 or the new 2025-23 rules |
πΌ What Business Owners & Taxpayers Should Know
π§ Not all accounting method changes are equal. Some can be done quickly using Form 3115 under the automatic method, while others need special IRS permission.
π£ If your business wants to:
- Change how it values inventory
- Adjust depreciation methods
- Correct a past mistake in accounting methods
π These changes may now be simpler, faster, and penalty-free β but only if you act within the new rules.
π§Ύ Related References
- Rev. Proc. 2025-23 β Full Text (irs.gov)
- Rev. Proc. 2015-13 β Original procedure for automatic method changes
- Form 3115 β Application for Change in Accounting Method
