PLR 200703014: Late tax-year change application is treated as timely

Plain-English summary

A taxpayer hired accountants to change its tax year and initially expected to use an automatic procedure. After reviewing the actual data, it found that it did not qualify for that procedure but still wanted the change. The IRS found reasonable conduct and good faith with no prejudice to the government and treated the late Form 1128 as timely under the regulatory relief rules. The ruling addressed only the filing deadline and did not determine whether the requested tax-year change was permitted.

Ruling snapshot

• Question: May the late Form 1128 requesting a tax-year change be treated as timely?
• Outcome: Approved for filing timeliness only; substantive permission to change the tax year was not decided.
• Key authorities: Treas. Reg. § 301.9100-3; Rev. Proc. 2002-38.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200703014
Third Party Communication: None
Release Date: 1/19/2007
Date of Communication: Not Applicable
Index Number: 9100.09-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:ITA:B04
PLR-117270-06
Date:
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October 19, 2006

Legend

X - ------------------------------------------------------- Date 1 - ------------------ Date 2 - --------------- Date 3 - -----------------------

Dear -----------------------------

This letter ruling 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 engaged an accounting firm to research the requirements and to prepare any necessary forms to change its accounting tax year end. Originally, X planned to effect the change using the automatic provisions of Rev. Proc. 2002-38, 2002-1 C.B. 1037. However, when the actual data for all of the relevant periods were summarized, X did not qualify to use the automatic provisions of Rev. Proc. 2002-38, but still desired to change to a tax year ending on Date 2.

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.
PLR-117270-06
2

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.

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.

This 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 Internal Revenue Code or Income Tax 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