Differing considerations may affect taxpayer decisions on accounting method changes. For example, taxpayers seeking to increase cash flow and decrease their current cash tax liability may benefit from accounting method changes that accelerate deductions or defer revenue. At the same time, because of the increased IRS focus on uncertain tax positions, taxpayers also may want to file accounting method changes to correct improper methods of accounting and obtain audit protection. An accounting method change from an improper to a proper method of accounting may increase taxable income.
Over recent years, the number of changes that can be made without prior IRS consent has increased dramatically. One advantage to being able to file a change automatically is the deadline. A taxpayer that is not currently under IRS examination may file an automatic Form 3115, Application for Change in Accounting Method, at any time on or before the due date of the taxpayer's timely filed federal income tax return (including extensions). For example, the deadline for calendar-year corporations with a six-month filing extension is September 15.