PLR 200303014: Late accounting period change application treated as timely

Plain-English summary

A taxpayer sought to change its tax year end from December 31 to March 31, but filed Form 1128 after its May 15 deadline. The filing was made within 90 days of the deadline, and the delay 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 ruled that the late Form 1128 would be considered timely filed under Treasury Regulation section 301.9100-3. The letter limited its ruling to the filing of Form 1128 and gave no opinion on other tax consequences.

Ruling snapshot

• Question: May the late Form 1128 for a March 31 tax year end be treated as timely filed?
• Outcome: Approved. The application is considered timely filed.
• Key authorities: Treas. Reg. §§ 1.442-1(b), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

September 24, 2002

Number: 200303014
Release Date: 01/17/2003
Index Nos.: 9100.09-00

Attn:

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 December 31, to a taxable year ending March 31, effective for the tax year beginning January 1, 2002, and ending March 31, 2002. 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 March 31 was due on or before May 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, 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 March 31, effective for the tax year beginning January 1, 2002, 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.

In accordance with the provisions of a power of attorney currently on file with this office, a copy 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,

Roy Hirschhorn
Assistant Branch Chief, Branch 5
Office of Associate Chief Counsel
(Income Tax & Accounting)

Enclosures:
Copy of this letter
Copy for § 6110 purposes