IRS Updates Automatic Accounting Method Changes with Rev. Proc. 2025-23

In a significant procedural update, the IRS has released Revenue Procedure 2025-23, revising the list of accounting method changes that may be made under the automatic consent procedures of § 446(e). For CPAs and tax professionals managing compliance for corporations and partnerships, this is a critical development.

Effective for Forms 3115 filed on or after June 9, 2025, the new revenue procedure updates dozens of sections of the Internal Revenue Manual and adds 17 new method changes across 32 total areas—including critical shifts related to revenue recognition, inventory, and depreciation.

What’s New in Rev. Proc. 2025-23?

Here are the most relevant takeaways:

• Expansion of Automatic Changes:Taxpayers may now request automatic consent for a wider range of accounting method changes no advance IRS permission required.

• Key Areas of Update:

  • Transition from cash to accrual (and vice versa)

  • Adjustments to depreciation methods and recovery periods

  • Changes in income recognition methods under § 451

  • Inventory accounting updates under §§ 263A and 471

  • Section 174 treatment of R&E expenditures

• Streamlined Filing Procedures:Many of the new changes allow for consolidated filings across entities under a common parent reducing duplicative Form 3115 submissions.

  
  

Why It Matters Now

For firms advising closely held businesses, large corporations, or startups with evolving revenue models, these updates could:

• Unlock retroactive deductions or timing benefits

• Simplify audit exposure by aligning method changes with IRS-sanctioned procedures

• Eliminate the need for costly non-automatic change requests that involve IRS review

  
  

In short, this is a significant procedural modernization that could create planning opportunities but only if you act before year-end.

Action Items for CPAs and Controllers

• Review open 2024 tax year accounting methods

• Flag clients with revenue or inventory issues related to ASC 606 or § 263A

• Consider changes that can now be filed automatically via Form 3115

• Reevaluate prior year non-automatic changes that may now qualify under Rev. Proc. 2025-23

  
  

How Bizora AI Can Help

Bizora AI makes navigating method changes easier. Whether you’re exploring a switch from cash to accrual, or trying to understand the implications of § 451(b), our platform can:

• Summarize IRS revenue procedures in plain language

• Cross-reference changes to existing method approvals

• Help auto-draft memos explaining the impact to clients or internal teams

• Identify potential Form 3115 filings eligible under Rev. Proc. 2025-23

  
  

Need a custom analysis of Rev. Proc. 2025-23 for your client base?→ Ask Bizora AI and get instant answers with citations.