Automatic consent, in the context described in the provided reference, refers to a streamlined process that allows taxpayers to make certain changes to their accounting methods without needing explicit prior approval from the tax authority for each individual request.
The reference specifically details an automatic consent procedure for taxpayers concerning depreciation and amortization.
Understanding Automatic Consent for Depreciation and Amortization
According to the provided revenue procedure, this automatic consent process is designed to permit a taxpayer who has claimed less than the depreciation or amortization allowable to change the taxpayer's method of accounting to claim allowable depreciation or amortization.
Essentially, if a taxpayer realizes they have not been claiming the correct amount of depreciation or amortization deduction that they were legally allowed to take, this procedure provides a simplified way for them to correct this error and start claiming the proper amount going forward.
Why Use Automatic Consent?
- Efficiency: It significantly reduces the administrative burden on both the taxpayer and the tax authority compared to requesting individual approval for every change.
- Simplicity: It provides clear guidelines for making the change, making the process more straightforward for the taxpayer.
- Correction: It allows taxpayers to easily correct past under-claimed deductions related to depreciation or amortization.
Key Aspects of This Specific Automatic Consent
- Applicability: Applies to taxpayers who have claimed less than the allowable depreciation or amortization.
- Purpose: To change the method of accounting to correctly claim the allowable amounts.
- Mechanism: It's an "automatic" procedure, meaning specific forms and requirements are followed, and consent is granted provided those steps are met, without a lengthy review process.
This procedure is a common example of how tax authorities create simplified pathways for taxpayers to correct errors or adopt preferred accounting methods under specific, well-defined circumstances.
