Rev. Proc. 2025-23 Updates List of Automatic Accounting Method Changes and Provides Transition Rules for Forms 3115

On June 9, 2025, the IRS issued Rev. Proc. 2025-23 to update and replace the list of permissible automatic tax accounting method changes previously provided under Rev. Proc. 2024-23. Rev. Proc. 2025-23 is effective immediately for Forms 3115 filed on or after June 9, 2025, for a year of change ending on or after October 31, 2024. Rev. Proc. 2025-23 primarily removes obsolete method changes and language.

Key Updates

Rev. Proc. 2025-23 incorporates certain changes for specified research or experimental (SRE) expenditures under Internal Revenue Code Section 174. These changes were previously issued in Rev. Proc. 2024-34, which provided guidance for taxpayers with short taxable years in 2022 and 2023, and in Rev. Proc. 2025-8, which expanded the ability of taxpayers with taxable years beginning in 2024 to file an automatic accounting method change.

Note that under the Senate Finance Committee’s proposed reconciliation tax bill released on June 16, taxpayers would not be required to amortize domestic SREs for tax years beginning after December 31, 2024, but would be able to immediately expense costs paid or incurred during the taxable year. SREs attributable to foreign research would remain subject to amortization over a 15-year period. As currently proposed, the bill would allow taxpayers with domestic SREs for taxable years beginning after December 31, 2021, and before January 1, 2025, to elect to deduct any remaining unamortized amount in the first taxable year beginning after December 31, 2024, or ratably over the two-year taxable period beginning with the first taxable year beginning after December 31, 2024. Alternatively, taxpayers could continue to amortize domestic SREs for taxable years beginning after December 31, 2021, and before January 1, 2025. The legislative process is ongoing, and enactment is not certain. These provisions could also continue to evolve.

Rev. Proc. 2025-23 also incorporates the ability of a regulated financial company to change its method of accounting to the Allowance Charge-off Method under proposed Treas. Reg. §1.166-2(d)(1), as added by Rev. Proc. 2024-30.

Transition Relief

The majority of automatic accounting method changes require taxpayers to attach the original Form 3115 to the tax return for the year of change and concurrently file a duplicate copy of the Form 3115 with the IRS Ogden, Utah office. Rev. Proc. 2025-23 includes the following transition relief for filing Forms 3115:

• Accounting method changes for a year of change ending on or after October 31, 2024, where a duplicate copy of the Form 3115 was filed with the IRS Ogden, Utah office under Rev. Proc. 2024-23 prior to June 9, 2025, require no additional action other than the required filing of the original Form 3115 (under Rev. Proc. 2024-23) with the timely filed federal income tax return. Note that the IRS may request written substantiation that the duplicate copy of the Form 3115 was filed before June 9, 2025, with the IRS Ogden, Utah office.
• Alternatively, if a taxpayer wants to refile the automatic accounting method change under Rev. Proc. 2025-23, it may do so. The Form 3115 must be revised to comply with Rev. Proc. 2025-23 and the duplicate copy must be refiled with the IRS in Ogden, Utah by the normal due date (including extensions, if applicable), with a notation that it is being filed under the transition rule.