PLR 200606029: Late tax year change application treated as timely

Plain-English summary

A corporation's representative missed the extended deadline for Form 1128 because of an administrative oversight. The form sought permission to change the corporation's tax year under the automatic consent procedure in Revenue Procedure 2002-37. The IRS found reasonable and good faith conduct and no prejudice to the government, so it treated the late application as timely under Treasury Regulation section 301.9100-3. It forwarded the application to the responsible service center. The ruling granted filing deadline relief only and did not decide whether the requested accounting period change was allowed. The dates of the requested change are redacted.

Ruling snapshot

• Question: Could the corporation's late Form 1128 be treated as filed on time?
• Outcome: Approved deadline relief; the requested tax year change remained undecided.
• 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: 200606029
Third Party Communication: None
Release Date: 2/10/2006
Date of Communication: Not Applicable
Index Number: 9100.09-00
Person To Contact:
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-------------------------, ID No. -------------
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Telephone Number:
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Refer Reply To:
CC:ITA:B04
PLR-147848-05
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Date:
October 27, 2005

X – -------------------------------------------
Date 1 – ------------------
Date 2 – ---------------
Date 3 – -----------------------
Date 4 – -----------------------
Date 5 – ------------------

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

This ruling letter is in reference to X’s request that its Form 1128, Application to Adopt, Change, or Retain a Tax Year, be considered timely filed under the authority contained in § 301.9100-3 of the Procedure and Administrative Regulations. X is requesting permission to change its accounting period, for federal income tax purposes, from a taxable year ending on Date 1 to one ending on Date 2, effective Date 3.

X contends that it qualifies to effect its change in accounting period under the automatic consent procedures of Rev. Proc. 2002-37, 2002-1 C.B. 1030. An extension of time to file Form 1120 was filed by Date 4, extending the due date for filing Form 1128 to Date

5. Due to an administrative oversight, X’s representative failed to timely file the Form
   1128.

Rev. Proc. 2002-37 provides the exclusive procedures for certain corporations to obtain automatic approval to change their annual accounting period under § 442 of the Internal Revenue Code and § 1.442-1(b) of the Income Tax Regulations. Section 7.02(2) provides that a Form 1128 filed pursuant to the revenue procedure will be considered timely only if it is filed on or before the due date (including extensions) for filing the federal income tax 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, we have concluded that X has acted reasonably and in good faith in respect to this matter. Furthermore, we have determined that the granting of relief in this case will not prejudice the interests of the government within the intendment of § 301.9100-3(c)(1). Accordingly, the requirements of § 301.9100-3 for the granting of relief have been satisfied, and X’s late filed Form 1128 requesting permission to change from a tax year ending on Date 1, to one ending on Date 2, effective Date 3, is considered timely filed.

Because changes in accounting period under Rev. Proc. 2002-37 are under the jurisdiction of the Director, Internal Revenue Service Center where X’s returns are filed, we have forwarded the application to the Director, Ogden Service Center. Any further communication regarding this matter should be directed to the Ogden Service Center.

The ruling contained in this letter is based upon facts and representations submitted by X 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.

The ruling addresses the granting of § 301.9100-3 relief only. No opinion is expressed or implied regarding the tax treatment of the instant transaction under the provisions of any other section 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 or implied as to whether X is permitted under the Code and the applicable regulations to change to the tax year requested in the subject Form 1128.

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) provides that it may not be used or cited as precedent. Enclosed is a copy of the letter ruling showing the deletions proposed to be made in the letter when it is disclosed under § 6110.

In accordance with the provisions of a power of attorney currently on file, we are sending a copy of this letter to the taxpayer’s authorized representative.

Sincerely,
Michael J. Montemurro
Branch Chief
Office of Associate Chief Counsel
(Income Tax & Accounting)

Enclosure