Final answer:
Businesses must get permission from the IRS when they want to adopt a new accounting method, typically by filing Form 3115.
Step-by-step explanation:
For tax purposes, when a business wants to adopt a new accounting method, it must get permission from the Internal Revenue Service (IRS). The IRS requires businesses to file a specific form to request a change in accounting method.
The goal of seeking permission is to ensure that the change doesn't allow for an inappropriate deferral of income or acceleration of deductions. According to the IRS, the form commonly filed is Form 3115, Application for Change in Accounting Method. It's important for businesses to follow IRS regulations and guidance to remain in compliance with tax laws.
The IRS is responsible for enforcing tax laws in the United States. They require businesses to follow specific accounting methods for reporting income and expenses. If a business wants to change its accounting method, it must file a request with the IRS and obtain permission before making the change.
For example, a business that has been using the cash method of accounting may want to switch to the accrual method. To do so, they would need to submit Form 3115 to the IRS and receive approval before making the change.