PLR 200245046: Late accounting period change application treated as timely

Plain-English summary

A taxpayer sought to change its tax year from a September 30 year end to a December 31 year end beginning October 1, 2001. The Form 1128 application was filed after the March 15, 2002 deadline, but within 90 days, and the late filing resulted from an error or misunderstanding. The IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. It therefore treated the late filed Form 1128 as timely.

Ruling snapshot

• Question: Could a late Form 1128 application to change the taxpayer's accounting period be treated as timely?
• Outcome: Approved under the regulatory extension rules.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b), 301.9100-3; Rev. Proc. 2000-11.

Full text (IRS public release)

INTERNAL REVENUE SERVICE

Number: 200245046
Release Date:11/8/2002
Index Nos.: 9100.09-00

CC:ITA:Br05//PLR-135132-02

August 7, 2002

In re:

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 September 30, to a taxable year ending December 31, effective for the tax year beginning October 1, 2001, and ending December 31, 2001. 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 March 15, 2002, but was not timely filed; however, the form was filed shortly thereafter, within 90 days of the due date. Information furnished indicates that the late filing was due to an error or misunderstanding.

Section 1.442-1(b) of the Income Tax Regulations, as then in effect, provided 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 (a) the 15th day of the second calendar month following the close of the short period or (b), if Rev. Proc. 2000-11, 2000-1 C.B. 309, is applicable, as in the instant case, on or before the due date (including extensions) for filing the return for the short period required to effect 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 December 31, effective for the tax year beginning October 1, 2001, is considered timely filed.

The ruling contained in this letter is based upon facts and representations submitted by the taxpayer, and is limited to the filing of Form 1128. Except as specifically addressed herein, no opinion is expressed regarding the tax treatment of the subject transaction under the provisions of any other sections of the Code or regulations that may be applicable thereto. This office has not verified any of the material submitted in support of the requested ruling; verification of factual information, representations, and other data may be required as part of an examination process.

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 with this office, the original of this letter is being sent to the taxpayer’s designated representatives.

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,
J. Charles Strickland
Senior Technician Reviewer, Branch 5
Associate Chief Counsel
(Income Tax and Accounting)

Enclosures:
Copy of this letter
Copy for § 6110 purposes

cc: