PLR 200027022: Late Form 1128 accepted for processing

Plain-English summary

Taxpayers filed Form 1128 late to request a change in their accounting period. They represented that the change qualified under the automatic rules and that they had timely filed related extensions and a return. The IRS found reasonable, good-faith conduct and treated the Form 1128 as timely filed under the regulatory extension rules. It sent the form for processing under the accounting period regulation. The ruling did not decide whether the taxpayers were substantively permitted to adopt the requested tax year.

Ruling snapshot

• Question: Can the taxpayers' late Form 1128 be treated as timely filed for a tax year change?
• Outcome: Approved as to filing timeliness only; substantive eligibility remains open.
• Key authorities: Treas. Reg. §§ 1.442-1(b), 1.442-1(c), and 301.9100-3

Full text (IRS public release)

INTERNAL REVENUE SERVICE

Number: 200027022
Release Date: 7/7/2000
Index Nos.: 9100.09-00
April 11, 2000

CC:DOM:IT&A:09 PLR-119490-99
Attention:

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 § 1.442-1(c) of the Income Tax Regulations, but did not timely effect the change. 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) 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 1.442-1(c) provides that under certain circumstances, a corporation may change its annual accounting period without the prior approval of the Commissioner. The corporation must file a statement with the district director with whom the returns of the corporation are filed at or before the time (including extensions) for filing the return for the short period required by such change.

Section 301.9100-3(a) 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

-2-

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.

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. 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 § 1.442-1(c).

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.

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