FASB Accounting Standard Update No. 2014-09 established a new method for businesses to recognize revenue from contracts with customers. Prior to the publication of the accounting standard, the applicable method of revenue recognition for customer contracts differed depending on the industry and the type of transaction. The FASB update established a single method for all industries and all transactions involving customer contracts: (1) identify the contracts with customers, (2) identify the contractual performance obligations, (3) identify the transaction price, (4) allocate the transaction price to each performance obligation and (5) recognize revenue upon satisfaction of a performance obligation.

The new financial reporting standard could create new book-tax differences, and it could affect tax reporting for situations in which revenue recognition for tax purposes depends on recognition for book purposes. Currently, taxpayers must file Form 3115 to alter the timing of revenue recognition for tax purposes, even when the change stems from a change in financial reporting. The IRS recently published Notice 2015-40 soliciting public comments regarding what types of accounting method changes taxpayers expect as a result of the FASB change and whether the procedures for requesting accounting method changes should be modified in these cases. The IRS will accept comments on the notice until September 16, 2015.

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