IRS WON'T RULE (FOR NOW) ON ACCOUNTING METHOD CHANGE FOR LOAN ORIGINATION COSTS.

Announcement 93-60

Lenders that desire to change their method of accounting from a method of deducting loan origination costs when paid to a method of capitalizing loan origination costs should not request permission to make this change from the National Office of the Internal Revenue Service at this time. This is a temporary suspension of the Service's ruling program with respect to this matter, pending the issuance of a revenue procedure for lenders who wish to change their method of accounting for loan origination costs.

The Service will also amend section 5 of Rev. Proc. 93-3, 1993-1 I.R.B. 71, to reflect this suspension. Any Form 3115, Application for Change in Accounting Method, requesting a ruling on this matter that is currently on file with the National Office, will be returned to the taxpayer with a cover letter, except where the loan-origination- costs issue was "pending" (as that term is defined in section 14.02 of Rev. Proc. 92-20, 1992- 1 C.B. 685, 707) at the time that the Form 3115 was filed. Any user fee submitted with a returned Form 3115 will be refunded.

If a taxpayer is currently under examination or subsequently comes under examination, the taxpayer may give the examining agent a copy of the returned Form 3115 and cover letter, or request a change in accounting method (with respect to loan origination costs) by filing a Form 3115 with the examining agent during the first 90 days of the examination or during any of the window periods available under Rev. Proc. 92-20. For taxpayers who file their Form 3115 with the examining agent, any change in method of accounting for loan origination costs will be made under terms no less favorable than those available to taxpayers not under examination. Thus, taxpayers will not be adversely affected by this proscription on filing a method change request regarding this matter with the National Office.

DRAFTING INFORMATION

The principal author of this announcement is Michael Burkom of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this announcement, contact Mr. Burkom on (202) 622-4990 (not a toll-free call).