12 JUN 2025 / IRS UPDATES

IRS Updates List of Automatic Accounting Method Changes

Summary

It is generated by AI

The IRS has released Rev. Proc. 2025-23, a comprehensive 430-page guide designed to simplify front-end compliance work on Form 3115 for CPAs. Effective from June 9, 2025, the update offers clearer instructions for tax accounting changes, detailing special accounting rules and regulations on a range of topics, ultimately assisting firms in maintaining compliance while aligning tax methods with operational strategies.

Hot off the press, the IRS has dropped Rev. Proc. 2025-23, a 430-page heavyweight update for tax professionals who live and breathe Form 3115. This new guidance, effective for filings made on or after June 9, 2025, applies to tax years ending October 31, 2024, or later, and it streamlines the process for scoring automatic consent to change your accounting method. The IRS is saying, “Let’s clean house,” giving CPAs a more direct route to compliance without the headache of nonautomatic procedures.

Clean Up Aisle 32

The revised list is sorted into 32 slick sections, categorized by Code provisions. It includes updates and clarifications across a range of accounting topics such as:

Gross income and trade/business expenses
Bad debts, interest, depreciation & amortization
Start-up costs, R&E expenditures, and software
Capital expenditures and UNICAP methods
Deferred comp, long-term contracts, and inventory (LIFO/mark-to-market)
Cash-to-accrual switches, Sec. 481(a) adjustments
Special rules for farmers and REMICs

And let’s not forget—17 major changes from last year’s Rev. Proc. 2024-23 cut. Each one comes with a detailed scope, exclusions, and a dedicated method change number for Form 3115 prep. Talk about plug-and-play compliance.

No More Playing Guesswork

One update spices things up: clarification on Sec. 481(a) now confirms adjustments apply “for any taxable year in which the election was made.” Translation? Fewer gray areas. Another sharp fix tightens up Section 15.12—making it crystal clear that the switch to cash accounting for farmers only applies to their farming business, not side hustles or non-farm operations.

Bottom Line

This isn’t just another regulatory drop. Rev. Proc. 2025-23 is a compliance cheat code for CPAs. It lets firms align their tax methods with operational strategies, especially during growth phases or structural overhauls. With fewer hoops and tighter guidance, it’s easier to stay compliant without getting bogged down in bureaucratic mud. Stay smart, stay updated—subscribe to MYCPE ONE Insights.

Until next time…

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