Can I change accounting method?

[JK33]

I'm a sole practitioner, and have always used the cash accounting method. In 2019 I did a significant amount of work and advanced a significant amount of cash for clients, but none of it was billed or paid until 2020. It looks like the large write offs in 2019 will only same me low tax bracket amounts, while the related income will cost me high tax bracket amounts in 2020. Can I switch from cash to accrual accounting so that I can count the writeoffs in 2019 against the associated income (which was fully earned in 2019)? If so, is there guidance somewhere online as to how to get the IRS onboard (in their form 3115, which is not supported by TurboTax)?

[Critter-3]

It is too late for the 2019 tax year ...

Once you have set up your accounting method and filed your first return, generally, you must receive approval from the IRS before you change the method. A change in your accounting method includes a change not only in your overall system of accounting but also in the treatment of any material item.

Approval required.

The following are examples of  changes in accounting method that require IRS approval.
• A change from the cash method to an accrual method
or vice versa.

https://www.irs.gov/pub/irs-pdf/p538.pdf

[Anonymous]

is it too late to file? wouldn't this be an automatic change under rev proc 2018-31 section 15.01?

When and Where To File
Automatic change requests. Except if instructed differently,
you must file Form 3115 under the automatic change procedures
in duplicate as follows.
• Attach the original Form 3115 to the filer's timely filed
(including extensions) federal income tax return for the year of
change. The original Form 3115 attachment does not need to be
signed.
• File a copy of the signed Form 3115 to the address provided
in the address chart on this page, no earlier than the first day of
the year of change and no later than the date the original is filed
with the federal income tax return for the year of change. This
signed Form 3115 may be a photocopy. For more on the
signature requirement, see the Name(s) and Signature(s)
section, later.

however, for the taxpayer, he should consult a tax pro that can look over his books and records.  without seeing them it's really difficult to give proper advice. 

i question as to whether or not some of the expenses he incurred would be properly treated as prepaid expenses and thus under the accrual method not deductible until 2019.  the next question is the proper amount of revenue to recognize in 2019.  

further the tax pro could discuss future years because if he changes methods he's sort of stuck with it for future years and may find it extremely disadvantageous.   

[Rick19744]

I think we just need to pause here and take a deep breath:

• Most small businesses use the cash method of accounting for a reason; it is much easier to handle accounting wise and more accurately accounts for the true economics of the business.
• As has been noted, if you use an accounting method for more than one year, you must continue to use that method unless you request permission to change.  This is done via completing Form 3115.
• Ok.  As you noted, you may have a lower tax bill in 2019, but what you need to do is take that savings and "bank it" for next year.  That is where many cash basis taxpayers get into trouble; they love the initial savings in tax, but don't "save" the savings for next year.  
• The revenue procedure cited (Rev Proc 2018-31) has been modified or amplified by several later released revenue procedures.  As such, if you still think you want to go down this road, it is highly suggested you either research the accounting method change or consult with a tax professional to ensure that you reference the correct guidance should you complete a Form 3115.
• Additionally, when changing methods, you need to compute what is known as a Section 481(a) adjustment.  This can be tricky, so make sure you either understand how this amount is computed or consult with a tax professional.
• In all honesty, since you know the tax implications of the advances, I believe you should just plan for the tax implications.  You may end up spending more time and $$ attempting to make a change than it is worth.  Plus, as has been noted, you need to continue to use the accrual method and one never knows what the following year(s) will bring.
• Keep in mind, all response are based on very limited facts and understanding of your specific situation, so once again, having a one on one with a tax professional may be $$ well spent.