PLR 200113023: Late accounting period application treated as timely

Plain-English summary

Taxpayers filed Form 1128 late to request a change in their federal income tax year. They said the delay resulted from an error or misunderstanding and filed within 90 days of the deadline. The IRS found they acted reasonably and in good faith and that relief would not prejudice the government. It treated the application as timely under Treasury Regulation section 301.9100-3. The IRS still required an additional user fee before processing the application and expressly gave no opinion on whether the requested accounting period change itself would be allowed.

Ruling snapshot

• Question: May the late Form 1128 requesting a change in tax year be treated as timely filed?
• Outcome: Approved: filing relief granted; the underlying accounting period change was not decided.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b), 301.9100-3.

Full text (IRS public release)

INTERNAL REVENUE SERVICE

Number: 200113023
Release Date: 3/30/2001
Index Nos.: 9100.09-00

CC:ITA:B9/PLR-121388-00

January 2, 2001

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 the last Sunday of June, 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' Form 1128 requesting a change in accounting
period to a
tax year ending
was due on or before
The information furnished
indicates that the application for the change in accounting period was filed late because of an error or misunderstanding. However, the form was filed within 90 days of the due date.

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, taxpayers 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 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 taxpayers provide evidence to establish that the taxpayers 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 -2- 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 the taxpayers’ late filed Form 1128 requesting permission to change to a
tax
year ending t
effective for the short
period of to is considered timely filed.

Pursuant to Appendix A of Rev. Proc. 2000-1, 2000-1 I.R.B. 4, 62, an additional user fee is required in order to process the Form 1128. The user fee will be requested in a separate correspondence. We will begin processing the taxpayers’ application after the user fee is received.

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.

In accordance with the provisions of a power of attorney currently on file, we are sending a copy of this ruling letter to the taxpayers' authorized representative.

This ruling is directed only to the taxpayers that requested it. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent.

Sincerely yours,
Associate Chief Counsel
Income Tax and Accounting
Heather Maloy

Enclosures:
Copy of this letter
Copy for § 6110 purposes