PLR 200838012: One-day-late accounting-method form copy is treated as timely

Plain-English summary

A taxpayer timely filed its return and original Form 3115 to obtain automatic consent to change its bad-debt accounting method. It failed to send the required duplicate Form 3115 to the IRS national office until one day after the deadline because of inadvertence and circumstances beyond its control. The IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. It treated the signed copy already submitted to the national office as timely filed. The ruling did not decide whether the taxpayer otherwise qualified for the requested method change.

Ruling snapshot

• Question: May the duplicate Form 3115 filed one day late with the national office be treated as timely?
• Outcome: Approved. The submitted copy is treated as timely filed.
• Key authorities: IRC § 446(e); Treas. Reg. §§ 301.9100-1, 301.9100-3; Rev. Proc. 2002-9.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200838012
Third Party Communication: None
Release Date: 9/19/2008
Date of Communication: Not Applicable
Index Number: 446.14-00, 9100.10-01
Person To Contact:
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Refer Reply To:
In Re: CC:ITA:B02
----------------------------------------- PLR-111557-08 Date: June 9, 2008

Legend:

Taxpayer = ----------------------------------------------------------------------------
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Date 1 = ---------------------------

Date 2 = --------------------------

Date 3 = ---------------------------

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

This ruling is in reply to the letter and enclosures requesting an extension of time under section 301-9100-1(c) of the Procedure and Administration Regulations for Taxpayer to file a copy of Form 3115, Application for Change in Accounting Method, with the Internal Revenue Service (IRS) national office. This request was made in accordance with section 301.9100-3.

On Date 1, Taxpayer timely filed its federal income tax return for the taxable year ended Date 2 (year of change), along with the original Form 3115 filed under Rev. Proc. 2002-9, 2002-1 C.B. 327, to change its method of accounting for bad debts. However, a duplicate of the Form 3115 was not filed with the IRS national office until Date 3 (one day after the deadline contained in section 6.02(3)(a) of Rev. Proc. 2002-9). This delay was due to inadvertence and circumstances beyond Taxpayer’s control.

Rev. Proc. 2002-9 provides the procedures by which a taxpayer may obtain automatic consent to change certain methods of accounting. A taxpayer complying with
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all the application provisions of this revenue procedure has obtained the consent of the Commissioner to change the taxpayer’s method of accounting under section 446(e) of the Internal Revenue Code and the regulations thereunder.

Section 6.02(3)(a) of Rev. Proc. 2002-9 provides that a taxpayer changing a method of accounting pursuant to Rev. Proc. 2002-9 must complete and file a Form 3115 in duplicate. The original must be attached to the taxpayer’s timely filed (including extensions) original federal income tax return for the year of change, and a copy (with signature) of the Form 3115 must be filed with the IRS national office no earlier than the first day of the year of change and no later than when the original is filed with the federal income tax return for the year of change.

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a reasonable extension of time under the rules set forth in sections 301.9100-2 and 301.9100-3 to make certain regulatory elections. Section 301.9100-1(b) defines a regulatory election as an election whose due date is prescribed by a regulation published in the Federal Register, or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of section 301.9100-2.

Requests for relief under section 301.9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the Government. Section 301.9100-3(a).

Based solely on the facts and representations submitted, including affidavits, we conclude that the requirements of sections 301.9100-1 and 301.9100-3 have been satisfied. Accordingly, an extension of time is hereby granted for Taxpayer to file the necessary copy of the Form 3115 with the IRS national office. In this regard, we will consider the signed copy of the Form 3115 submitted by Taxpayer to the IRS national office on Date 3 as timely filed by Taxpayer for purposes of section 6.02(3)(a) of Rev. Proc. 2002-9.

Except as ruled upon above, no opinion is expressed or implied concerning the federal income tax consequences arising from Taxpayer’s activities. Specifically, we express no opinion concerning whether Taxpayer is qualified to file its application for a change in accounting method under Rev. Proc. 2002-9 or that it otherwise meets the requirements of that revenue procedure.

Pursuant to the power of attorney on file with this office, a copy of this letter is being sent to Taxpayer’s authorized representative.
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This ruling is directed only to Taxpayer, who requested it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

Sincerely,

Thomas D. Moffitt
Chief, Branch 2
(Income Tax and Accounting)