PLR 200025031: Late tax-year change application treated as timely filed

Plain-English summary

Taxpayers asked to change their accounting year and instructed their accounting firm to file Form 1128, but the firm overlooked the form. They had timely filed the related extensions and federal tax return. The IRS found they acted reasonably and in good faith and ruled that the late Form 1128 would be treated as timely filed under the extension regulations. The ruling addresses filing timeliness only; it does not decide whether the taxpayers qualify for the requested tax-year change.

Ruling snapshot

• Question: May the taxpayers' late Form 1128 be considered timely filed?
• Outcome: Approved; the form will be processed as timely filed.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b) and 301.9100-3; Rev. Proc. 92-13.

Full text (IRS public release)

INTERNAL REVENUE SERVICE

Number: 200025031
Release Date: 6/23/2000
Index Nos.: 9100.09-00

CC:DOM:IT&A:B9/PLR-119526-99

Attention: March 23, 2000
EIN:

Dear :

This is in reference to a Form 1128, Application to Adopt, Change, or Retain a Tax Year, submitted on behalf of the above- named taxpayers, requesting permission to change their accounting period, for federal income tax purposes, from a taxable year
ending , to a taxable year ending , effective
. The taxpayers have requested that the Form 1128 be considered timely filed under the authority contained in § 301.9100-3 of the Procedure and Administration Regulations.

The taxpayers have represented that they were eligible to effect the proposed change in accounting period under the automatic provisions of Rev. Proc. 92-13, 1992-1 C.B. 665. Further, they represented that they requested their accounting firm to prepare and file the Form 1128, but that the accounting firm inadvertently overlooked the filing of Form 1128. The taxpayers did timely file all of the necessary extensions and the federal income tax return for a tax year ending
,
effective
.

Section 1.442-1(b) of the Income Tax Regulations provides that in order to secure the Commissioner's consent to a change in accounting period, the taxpayer must file an application on Form 1128 with the Commissioner on or before the 15th day of the second calendar month following the close of the short period. Section 7.02 of Rev. Proc. 92-13 states, in part, that a Form 1128 filed pursuant to this revenue procedure will be considered timely filed for purposes of § 1.442-1 (b)(1) if and only if, it is filed on or before the time (including extensions) for filing the return for the short period required by such change.

Section 301.9100-3(a) of the regulations provides that requests for extensions of time for regulatory elections that do not meet the requirements of § 301.9100-2 (automatic extensions), such as the instant case, must be made under the rules of § 301.9100-3. Requests for relief subject to § 301.9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good faith, and that the granting of relief will not prejudice the interests of the government.
-2-

Based on the facts and information submitted and the representations made, it is held that the taxpayers have acted reasonably and in good faith, and that the granting of relief will not prejudice the interests of the government. Accordingly, the requirements of the regulations for the granting of relief have been satisfied in this case, and taxpayers’ late filed Form 1128 requesting permission to change to a tax year ending
effective
, is considered timely
filed.

The ruling contained in this letter is based upon facts and representations submitted by the taxpayers and accompanied by a penalty of perjury statement executed by an appropriate party. This office has not verified any of the material submitted in support of the request for a ruling. Verification of the factual information, representations, and other data may be required as part of an examination process.

This ruling addresses the granting of § 301.9100-3 relief only. No opinion is expressed regarding the tax treatment of the instant transaction under the provisions of any other sections of the Code or regulations that may be applicable thereto, or regarding the tax treatment of any conditions existing at the time of, or effects resulting from, the instant transaction. Specifically, no opinion is expressed as to whether the taxpayers are permitted under the Code and applicable regulations to change to the tax year requested in the subject Form 1128.
A copy of this letter ruling and the Form 1128 are being forwarded to the service center where the taxpayers file their federal income tax returns with instructions that the Form 1128 be considered timely filed, and processed in accordance with established procedures under Rev. Proc. 92-13.

In accordance with the provisions of a power of attorney currently on file, we are sending a copy of this letter ruling to the taxpayers’ authorized representative(s).
This ruling is directed only to the taxpayers that requested it. Section 6110(j)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent.

Sincerely yours,
Assistant Chief Counsel
(Income Tax and Accounting)
By: William A. Jackson
Acting Deputy Assistant Chief Counsel

Enclosures:
Copy of this letter
Copy for § 6110 purposes