This document offers a comprehensive guide to completing Form 3115, "Application for Change in Accounting Method," for the year 2022. It covers general and specific instructions, step-by-step guidance on filling out the form, schedules, a list of automatic accounting method changes, and notices related to the Paperwork Reduction Act. In this article, we'll provide information on Form 3115 and a step-by-step guide on how to fill it out, keeping it straight to the point.
.png "Instructions for Filling Out Form 3115 | Pilot Blog (1)")
What is Form 3115?
Form 3115 is an IRS form that taxpayers use to request a change in their accounting method, either for their overall accounting or for the treatment of specific items. The purpose of this form is to obtain consent from the IRS for such changes, which can affect a taxpayer's income. The form covers both automatic and non-automatic change procedures and requires a section 481(a) adjustment for most changes to prevent duplication or omission of amounts. It includes various schedules (A through E) for different types of changes and a list of Designated Change Numbers (DCNs) summarizing automatic accounting method changes. The instructions for Form 3115 provide details on who must file, when and where to file, and the required documentation to support the request for a change in accounting method.
Who Must File Form 3115?
Form 3115 must be filed by the entity or person required to request a change in accounting method, either on their own behalf or on behalf of another entity. This includes the common parent corporation of a consolidated group of corporations, which must file the form for itself and any group members. Generally, a separate Form 3115 must be filed for each applicant seeking consent to change an accounting method, as well as for each separate trade or business of an applicant, including qualified subchapter S subsidiaries (QSubs) and single-member limited liability companies (LLCs).
Form 3115 Tax Filing Deadlines and Due Dates
- Automatic change requests:
- Attach the original Form 3115 to the filer's timely filed (including extensions) federal income tax return for the year of change. The original does not need to be signed.
- File a signed duplicate copy of Form 3115 with the IRS National Office at the specified address no earlier than the first day of the year of change and no later than the date the original is filed with the federal income tax return for the year of change.
- Non-automatic change requests:
- File Form 3115 under the non-automatic change procedures during the tax year for which the change is requested, unless otherwise provided by published guidance.
- Submit the form to the IRS National Office at the specified address, and file as early as possible during the year of change to provide adequate time for the IRS to respond.
Form 3115 Late Payment Penalty
Although the late payment penalty for Form 3115 is not explicitly mentioned in the instructions, it is important to note that penalties may apply if the change in accounting method affects the reporting of income and the tax owed is not paid by the due date. To avoid potential penalties, taxpayers should ensure they comply with IRS guidelines and properly file or request the change in accounting method as required.
Step-by-Step Instructions for Form 3115
Step by Step Instructions for Filling Out Form 3115:
- Review Introductory Material: Check for any future developments and updates to the instructions that may affect how you fill out the form.
- Understand the Purpose and Procedures: Determine whether you need to file under automatic or non-automatic change procedures based on your specific situation.
- Gather Required Information: Collect all necessary information, including taxpayer identification numbers, principal business activity codes, and details about the accounting method change you are requesting.
- Complete Specific Sections of Form 3115: Fill out the form according to the specific instructions provided, ensuring all relevant parts and schedules are accurately completed based on the type of change you are requesting.
- Refer to the List of DCNs: If applicable, identify the designated change number (DCN) for the accounting method change you are requesting and ensure you comply with the associated guidance.
- Review and Submit: Double-check all information for accuracy, sign the form, and submit it to the appropriate IRS office, along with any required attachments, by the specified deadline.
How to Submit Form 3115
To submit Form 3115, first determine if the change is automatic or non-automatic. Complete the relevant parts of the form, including all required schedules. For automatic change requests, file the original Form 3115 with the filer's timely filed federal income tax return for the year of change and send a signed duplicate copy to the IRS National Office. For non-automatic change requests, file Form 3115 with the IRS National Office during the tax year for which the change is requested, as early as possible during the year of change. If applicable, pay the user fee for non-automatic change requests through PAY.gov.
Need Help with other Finance or Startup Questions?
Choose Pilot for expert bookkeeping, CFO, and tax services, catering to thousands of startups and expanding businesses. With over 10 million transactions processed and exceptional proficiency in promoting business growth, we are the top startup-centric accounting firm in the U.S. Our goal is to help you thrive. Reach out to our sales team or check out our demo for more information!
