PLR 200123028: Late accounting period application accepted as timely

Plain-English summary

A taxpayer asked the IRS to treat its late Form 1128 application for a change in accounting period as timely. An error or misunderstanding caused the missed deadline, and the form was filed within 90 days of its due date. The IRS found reasonable, good faith conduct and no prejudice to the government, so it granted filing relief under Treas. Reg. § 301.9100-3. The ruling only made the form timely; the IRS did not decide whether the taxpayer was permitted to change to the requested tax year.

Ruling snapshot

• Question: Can the late Form 1128 request for an accounting period change be treated as timely?
• Outcome: Approved, for timeliness only
• Key authorities: Treas. Reg. §§ 1.442-1(b), 301.9100-3; Rev. Proc. 2000-11

Full text (IRS public release)

INTERNAL REVENUE SERVICE

Number: 200123028
Release Date: 6/8/2001
Index Nos.: 9100.09-00

CC:IT&A:B9 PLR-128143-00

March 7, 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 taxpayer, requesting permission to change its accounting period, for federal income tax purposes, from a taxable year
ending
, to a taxable year ending
, effective
. The taxpayer has
requested that the Form 1128 be considered timely filed under the authority contained in § 301.9100-3 of the Procedure and Administration Regulations.

The information furnished indicates that due to an error or misunderstanding, the Form 1128 was not timely filed. However the taxpayer filed the form 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, 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 6.02(2) of Rev. Proc. 2000-11, 2000-3 I.R.B. 312 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 taxpayer has 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 taxpayer’s 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 taxpayer 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 taxpayer is 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 taxpayer's Form 1128 are being forwarded to the service center where the taxpayer files its federal income tax returns with instructions that the Form 1128 be considered timely filed, and processed in accordance with established procedures under Rev. Proc. 2000-11.

This ruling is directed only to the taxpayer 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,
Associate Chief Counsel
Income Tax and Accounting
Heather Maloy

Enclosures:
Copy of this letter
Copy for § 6110 purposes