PLR 200303007: Late tax year change application is treated as timely filed

Plain-English summary

A taxpayer filed Form 1128 late while seeking to change its tax year end from August 31 to December 31. It said an error or misunderstanding caused the late filing. Under the extension rules, the IRS found that the taxpayer had acted reasonably and in good faith and that relief would not prejudice the government. It treated the Form 1128 as timely filed. The IRS expressly left the separate question of whether the requested tax year change was permissible for another correspondence.

Ruling snapshot

• Question: Will the IRS treat the late Form 1128 as timely filed?
• Outcome: Approved. Filing relief was granted, but permission to change tax years was not decided.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b), 301.9100-3; Rev. Proc. 2002-39.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200303007
Washington, DC 20224
Release Date: 1/17/03
Index Nos.: 9100.09-00
Person to Contact:

Telephone Number:

Refer Reply To:
Legend
CC:ITA:4 PLR-141134-02
Date:
Taxpayer: Sep 17, 2002
TIN:

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 August 31, 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 was due on or before The information furnished indicates that the application for the change in accounting period was filed late because of an error or misunderstanding.

Rev. Proc. 2002-39, 2002-22 I.R.B. 1046, provides the general procedures under
§ 442 of the Internal Revenue Code and § 1.442-1(b) of the Income Tax Regulations for establishing a business purpose and obtaining the approval of the Commissioner of Internal Revenue to adopt, change, or retain an annual accounting period for federal income tax purposes. This revenue procedure also describes the terms, conditions, and adjustments that the Commissioner may deem necessary to effect the adoption, change, or retention. Section 6.02(1) of Rev. Proc. 2002-39 provides that 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 (not including extensions) for filing the return for the short period required to effect such change. As noted above, the taxpayer’s Form 1128 was not timely filed.

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. 2 PLR-141134-02

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. 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.

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. The taxpayer’s application to change to the tax year requested in the subject Form 1128 will be addressed in a separate correspondence.

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,

Robert A. Berkovsky
Branch Chief
Office of Associate Chief Counsel
(Income Tax and Accounting)

Enclosures:
Copy of this letter
Copy for § 6110 purposes