A business that already chose how to recover its pre-2025 domestic research costs may now have two related questions: how that choice affects a later accounting-method adjustment, and whether a pending Form 3115 should be converted to the automatic process.

Revenue Procedure 2026-32 supplies those mechanics. It modifies the IRS automatic-change procedures for research or experimental expenditures under sections 174 and 174A, including the treatment of remaining unamortized balances. It also contains separate changes for residential construction contracts under section 460; this article focuses on the research-expense provisions.

Domestic and foreign research now follow different rules

For taxable years beginning after Dec. 31, 2024, section 174A generally allows a current deduction for domestic research or experimental expenditures. A taxpayer can instead elect to capitalize qualifying domestic expenditures and amortize them over at least 60 months, subject to the statutory and procedural requirements.

Foreign research did not receive the same treatment. Section 174 continues to require foreign research or experimental expenditures to be capitalized and amortized over 15 years, beginning with the statutory midpoint convention.

Those are the substantive rules. Revenue Procedure 2026-32 mainly changes how taxpayers obtain automatic consent for related accounting-method changes and how those changes interact with transition choices for older domestic costs.

The section 481(a) answer depends on which costs are changing

The change to section 174A treatment for post-2024 domestic costs generally uses a cut-off approach: those new costs move to the selected section 174A method without a section 481(a) adjustment for the same post-2024 expenditures.

A separate issue arises when a taxpayer corrects its method for domestic research costs paid or incurred in taxable years beginning after 2021 and before 2025. Revenue Procedure 2026-32 modifies the procedure for that change so a section 481(a) adjustment reflects any prior election to recover the remaining unamortized amount. If the correction and the recovery election occur in the same first taxable year beginning after 2024, a net positive adjustment follows the same one-year or two-year recovery period. If the recovery election occurred earlier, the positive adjustment uses the period remaining under that election. A negative modified adjustment may instead be implemented on a cut-off basis.

This is why “switch to the current deduction” is not a complete filing instruction. A business has to separate post-2024 domestic spending from pre-2025 balances and identify any recovery choice already made under the 2025 procedure.

Some repeat changes can still use the automatic process

Automatic consent normally comes with eligibility limits under Revenue Procedure 2015-13. Revenue Procedure 2026-32 waives specified eligibility rules for the research-expense changes described in sections 7.01, 7.02 and 7.03 of Revenue Procedure 2025-23 for taxable years beginning before 2028. It also permits certain changes after only one year of using an impermissible method.

The waiver is not a general promise that every Form 3115 qualifies. The taxpayer still has to fit the applicable research change and satisfy the rest of the automatic-change procedure.

Sept. 4 and Nov. 15 govern the transition between procedures

The revised research provisions are generally effective for a Form 3115 filed after Sept. 4, 2026. A transition rule covers taxpayers that properly filed the duplicate copy of certain Forms 3115 on or before Nov. 15, 2026 under the prior version of Revenue Procedure 2025-23.

If the original return implementing the change has not yet been filed and the change remains eligible under the revised procedure, the taxpayer may use either the prior procedure or the revised one, but not both. Choosing the revised procedure requires a signed duplicate copy to be resubmitted to the IRS in Ogden with the statement specified in section 6.02(2)(b) of Revenue Procedure 2026-32 at the top of page 1. The transition rule does not extend the ordinary deadline for the original or duplicate Form 3115.

Pending nonautomatic requests have a separate conversion process

A taxpayer that properly filed a qualifying nonautomatic Form 3115 before Sept. 21, 2026, and still had it pending with the IRS National Office on Sept. 21, may choose the automatic procedure if otherwise eligible.

The taxpayer must notify the National Office contact person before the later of Oct. 21, 2026, or the issuance of a ruling granting or denying consent. If the contact is unknown, the revenue procedure supplies a backup fax number and mailing destination. A timely conversion produces an acknowledgment letter and return of the user fee.

That acknowledgment is not the last step. The taxpayer must submit a conforming automatic Form 3115 with the acknowledgment letter attached by the earlier of the 30th calendar day after the letter or the otherwise applicable duplicate-copy deadline. The original converted Form 3115 still has its normal filing deadline.

What did not change

Revenue Procedure 2026-32 does not turn foreign research into a current deduction, and it does not mean every business with domestic research must file Form 3115. Classification comes first, and the filing consequences depend on the existing method, the year of change, prior method changes and transition elections.

The procedure also does not settle every research-credit question. Section 280C can reduce the domestic research expenditures otherwise deducted or capitalized unless the taxpayer makes the reduced-credit election. That election and the accounting-method work should be reconciled rather than reviewed in separate files.

What a business should pull before deciding what to file

Start with a 2022–2026 research-expense schedule by year and location. Add prior Forms 3115; the 2025 election or method-change statements under Revenue Procedure 2025-23, as modified; the schedule of remaining unamortized domestic costs; any section 481(a) workpapers; Forms 6765 and section 280C elections; and the current treatment of domestic and foreign costs.

Then sort the decision into four boxes: post-2024 domestic costs, post-2024 foreign costs, remaining pre-2025 domestic balances and any pending Form 3115. That makes the Sept. 4, Oct. 21 and Nov. 15 dates operational rather than decorative.

Sources

Primary sources, last checked Sep. 27, 2026:
IRS Internal Revenue Bulletin 2026-39 — Revenue Procedure 2026-32
IRS Internal Revenue Bulletin 2025-38 — Revenue Procedure 2025-28 and modified Revenue Procedure 2025-23 procedures
IRS — About Form 3115