PLR 200137008: Late application for an August tax year is treated as timely

Plain-English summary

A taxpayer asked to change from a December 31 to an August 31 tax year, but filed Form 1128 after its deadline because of an error or misunderstanding. The form arrived within 90 days of that deadline. The IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. It treated the form as timely filed under the § 301.9100-3 relief rules. The letter did not decide whether the requested accounting period change itself was allowed.

Ruling snapshot

• Question: May the late Form 1128 for an August 31 tax year be treated as timely filed?
• Outcome: Approved for filing timeliness only.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b), 301.9100-3.

Full text (IRS public release)

INTERNAL REVENUE SERVICE

Number: 200137008
Release Date: 9//14/2001
Index Nos.: 9100.09-00

CC:ITA:9 PLR-121287-01
June 15, 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 December 31, to a taxable year ending August 31, effective August 31, 2000. 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 taxpayer’s Form 1128 requesting a change in accounting period to a tax year ending August 31, 2000, was due on or before November 15, 2000. However, 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.

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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 August 31 effective August 31, 2000 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.

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

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