PLR 200209016: Late request to change tax year treated as timely

Plain-English summary

A married couple asked to change their tax year from an October 31 year-end to a calendar year but filed Form 1128 after its deadline. The IRS found that they intended to file on time and that the delay resulted from an error or misunderstanding. It granted relief under the regulatory extension rules and treated the Form 1128 as timely filed. The IRS expressly did not decide whether the requested tax-year change itself was permissible; it would process the application after receiving the required user fee.

Ruling snapshot

• Question: Can a late Form 1128 seeking a calendar tax year be treated as timely filed?
• Outcome: Approved for filing deadline relief only; the requested accounting period change remained undecided.
• Key authorities: Treas. Reg. §§ 1.442-1(b) and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
aep~rtment of the qre~sury

Number: 200209016
Washington, DC 20224
Release Date: 3/1/2002
Index No: 9100.09-00
Person to Contact:

Telephone Number:

Refer Reply To:
’
CC:ITA:5 – PLR-145681-01
Date: November 27, 2001

SSN:

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, husband and wife (hereinafter taxpayer), requesting permission to change its annual accounting period, for federal income tax purposes, from a taxable year ending October 31, to a calendar year ending December 31, effective for the tax year beginning November 1, 2000, and ending December 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 December 31 was due on or before February 15, 2001. Information furnished indicates that the taxpayer intended to file the form on a timely basis, but due to an error or misunderstanding, the form was not timely filed. 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, 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. Rev. Proc. 66-50, 1966- 2 C.B. 1260, provides “expeditious consent” procedures for individuals meeting the requirements thereof to change their annual accounting periods from a fiscal to a calendar tax year. The revenue procedure is not available for use, however, by individuals who, as in the present case, derive income as a result of being members of a partnership. Sec. 5, Rev. Proc. 66-50.

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.

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

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PLR-145681-01

taxpayer’s late filed Form 1128 requesting permission to change to a tax year ending December 31, effective for the tax year beginning November 1, 2000, is considered timely filed.

Pursuant to Appendix A of Rev. Proc. 2001-1, 2001-1 I.R.B. 1, 64, a 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 taxpayer’s application after the user fee is submitted.

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.

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

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

Enclosures (2):
Copy of this letter
Copy for § 6110 purposes