PLR 200829003: Late application to change tax year treated as timely

Plain-English summary

A taxpayer filed Form 1128 after the deadline for changing its tax year from September 30 to December 31. It soon sought relief for the late filing. The IRS found that the taxpayer had acted reasonably and in good faith and that relief would not prejudice the government. It treated Form 1128 as timely filed and forwarded the application to the service center. The letter grants relief only from the filing deadline: it does not decide whether the requested tax year change is permitted or qualifies under the applicable revenue procedure.

Ruling snapshot

• Question: Could the late Form 1128 be treated as timely filed?
• Outcome: Approved as to timeliness only.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b), 301.9100-3; Rev. Proc. 2006-46.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200829003
Third Party Communication: None
Release Date: 7/18/2008
Date of Communication: Not Applicable
Index Number: 9100.00-00
Person To Contact:
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----------------------, ID No. -------------
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Telephone Number:
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Refer Reply To:
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CC:ITA:B05
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PLR-101276-08
Date:
March 31, 2008

Taxpayer: ---------------------------------------------- EIN: ----------------
Year: -------

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

This ruling is in reference to the taxpayer’s request that its Form 1128, “Application To Adopt, Change, or Retain a Tax Year,” be considered timely filed under the authority in
§ 301.9100-3 of the Income Tax Regulations on Procedures and Administration. Taxpayer filed a late Form 1128 to change its accounting period, for federal income tax purposes, from a taxable year ending September 30, to a taxable year ending December 31, effective December 31, Year.

Rev. Proc. 2006-46, 2006-45 I.R.B. 859, provides the exclusive procedure for a partnership, S corporation, electing S corporation, personal service corporation, or trust to obtain automatic approval to change its annual accounting period under
§ 442 of the Internal Revenue Code and § 1.442-1(b) of the Income Tax Regulations. A taxpayer complying with all the applicable provisions of this revenue procedure will be deemed to have obtained the approval of the Commissioner of the Internal Revenue Service to change its annual accounting period. Section 7.01(2) of Rev. Proc. 2006-46 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 taxpayer filed 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),

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such as the instant case, must be made under the rules of § 301.9100-3. Request 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 interest of the government.

Based on the facts and information submitted and the representations made, we conclude that Taxpayer has acted reasonably and in good faith, and that the granting of relief will not prejudice the interest of the government. Accordingly, Taxpayer has satisfied the requirements of the regulations for the granting of relief, and Taxpayer’s late filed Form 1128 requesting to change to December 31, effective December 31, Year, is considered timely filed.

Because a change in period under Rev. Proc. 2006-46 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, ------------------Service Center. Any further communication regarding this matter should be directed to the Service Center.

This ruling 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. However, as part of an examination process, the Service may verify the factual information, representations, and other data submitted.

This ruling addresses the granting of § 301.9100-3 relief only. We express no opinion regarding the tax treatment of the instant transaction under the provisions of any other section of the code or the regulations that may be applicable, or regarding the tax treatment of any conditions existing at the time of, or effects resulting from, the instant transaction. Specifically, we express no opinion as to whether the taxpayer is permitted under the Code and applicable regulations to change to the tax year requested in the Form 1128, or whether the change may be effected under Rev. Proc. 2006-46.

A copy of this letter must be attached to any income tax return to which it is relevant. Alternatively, taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter ruling.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code 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 when it is disclosed under
§ 6110.

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In accordance with the Power of Attorney on file with this office, we are sending a copy of this letter to your authorized representative.

Sincerely yours,

George F. Wright
Senior Technician Reviewer, Branch 5
(Income Tax & Accounting)
Office of Chief Counsel

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