PLR 200405008: Late accounting year application treated as timely

Plain-English summary

A corporation sought to change its tax year from one ending April 30 to one ending February 28, but filed Form 1128 after the deadline. It promptly requested an extension under the regulatory relief rules. The IRS found that the corporation had 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 for processing. The ruling addressed filing timeliness only; the IRS gave no opinion on whether the corporation could make the requested accounting period change.

Ruling snapshot

• Question: Could the late Form 1128 seeking an accounting period change be treated as timely filed?
• Outcome: The IRS granted filing relief but did not decide whether the accounting period change was permitted.
• Key authorities: IRC § 442; Treas. Reg. § 301.9100-3; Rev. Proc. 2002-37.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200405008
Release Date: 01/30/2004
Index Number: 9100.09-00

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Person To Contact:
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Telephone Number:
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Refer Reply To:
------------------------------------------------ CC:ITA:B04 – PLR-144652-03 Date:
October 29, 2003

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Dear: --------------

This is in reference to a Form 1128, Application to Adopt, Change, or Retain a Tax Year, submitted on behalf of the taxpayer (----------------------), requesting permission to change its accounting period, for federal income tax purposes, from a taxable year ending April 30, to a taxable year ending February 28, effective February 28, Year. 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.

Rev. Proc. 2002-37, 2002-1 C.B. 1030, provides procedures for certain corporations to obtain automatic approval to change their annual accounting period 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 7.01(2) of Rev. Proc. 2002-37 provides that a Form 1128 filed pursuant to the 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.

The information furnished indicates that the taxpayer did not file its Form 1128 by the due date of the return for the short period required to effect such change. However, the

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taxpayer requested an extension of time to file its Form 1128 under § 301.9100-3 soon thereafter.

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 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 February 28, effective February 28, Year, is considered timely filed. 1

Since a change in accounting periods under Rev. Proc. 2002-37 is 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, Philadelphia Service Center. 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, or whether the change may be effected under Rev. Proc. 2002-37.

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The taxpayer’s application for a change in accounting period will be processed under Rev. Proc. 2002-37.

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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

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