PLR 200218013: Late Form 1128 accepted for accounting period request

Plain-English summary

A taxpayer sought to change its tax year from June 30 to December 31. Its accountant failed to attach Form 1128 to the tax return, and the taxpayer requested deadline relief within 90 days of the return's due date. The IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. It treated the late Form 1128 as timely filed and forwarded the application to the service center. The IRS did not decide whether the taxpayer was permitted to make the requested tax year change.

Ruling snapshot

• Question: Can Form 1128 be treated as timely filed after the accountant omitted it from the return?
• Outcome: Approved: filing deadline relief was granted; the requested tax year change itself was not decided.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1 and 301.9100-3; Rev. Proc. 2000-11.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200218013
Washington, DC 20224
Release Date: 5/3/2002
Index Nos.: 9100.09-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:ITA:4 PLR-100538-02
Date:
January 29, 2002

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 taxpayer, requesting permission to change its accounting period, for federal income tax purposes, from a taxable year ending June 30, to a taxable year ending December 31, 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 taxpayer's Form 1128, requesting a change in accounting period to a tax year
ending December 31, was due on or before
The information
furnished indicates that the Form 1128 was to be filed with the taxpayer’s tax return, but the taxpayer’s certified public accountant failed to attach the Form 1128 to the tax return when it was forwarded to the taxpayer for a signature. However, this application for section 301.9100-3 relief was filed within 90 days of the returns due date.

Rev. Proc. 2000-11, 2000-1 C.B. 309, provides procedures by which certain corporations may obtain automatic approval to change their annual accounting periods under § 442 of the Internal Revenue Code. A corporation complying with all the applicable provisions of this revenue procedure has obtained the consent of the Commissioner of the Internal Revenue Service to change its annual accounting period under § 442 and the Income Tax Regulations thereunder. Section 6.02(1) of Rev. Proc. 2000-11 provides a Form 1128 filed pursuant to this revenue procedure will be considered timely filed for purposes of § 1.442-1(b)(1) only if it is filed on or before the time (including extensions) for filing the return for the short period required to effect 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 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 2

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 the taxpayer’s late filed Form 1128 requesting permission to change to a tax year ending December
31, effective for the short period of
, is considered timely filed.

Since changes in accounting period under Rev. Proc. 2000-11 are under the jurisdiction of the Director, Internal Revenue Service Center where the taxpayer’s returns are filed, we have forwarded the application to the Director,
. Any further communication regarding this matter should be directed to the Service Center.

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, 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,
Michael J. Montemurro
Senior Technician Reviewer
Office of Associate Chief Counsel
(Income Tax & Accounting)

Enclosures:
Copy of this letter
Copy for § 6110 purposes