PLR 200852027: Companion ruling treating a late Form 1128 as timely filed

Plain-English summary

This letter is a companion to PLR 0852028. The two were signed by the same reviewer on the same day and carry consecutive control numbers, PLR-135952-08 here and PLR-135953-08 there. Apart from those numbers and the lengths of the redaction marks, the text of the two rulings is identical. Both grant the same relief on the same reasoning, which is a reminder that a great many written determinations are routine administrative decisions issued in volume rather than one-off pronouncements.

The situation is a missed filing deadline. A taxpayer wanted to change its annual accounting period for federal income tax purposes and submitted Form 1128 to ask permission. Section 1.442-1(b) conditions the Commissioner's consent on filing that application within the time and manner set by published procedure. Rev. Proc. 2006-45 supplies that procedure, and its automatic consent route would have covered this change had the form been filed by the due date of the return for the short period. The form was late, so automatic consent was unavailable.

The taxpayer represented that it intended to make the change on time and failed to do so properly because of an error or omission. The Service noted that the failure did not stem from any lack of due diligence or prompt action, and that the taxpayer sought administrative relief shortly after the due date passed.

Relief came through section 301.9100-3, which governs extensions for regulatory elections that the automatic extension in section 301.9100-2 does not reach. It is granted where the taxpayer establishes that it acted reasonably and in good faith and that relief will not prejudice the interests of the government. The Service held both conditions met, so the late Form 1128 will be treated as timely filed and forwarded to the taxpayer's service center for processing under Rev. Proc. 2006-45.

The relief stops there. The ruling is limited to the filing of the Form 1128 and expresses no opinion on whether the taxpayer actually qualifies for automatic consent or on any other tax question. Verification of the facts is left to the taxpayer's IRS Industry Director on examination.

This is a clean digital release rather than a scan, so no OCR correction was needed. The old and new year ends, the effective period and the form's due date are all behind IRS redaction and appear below as runs of dashes.

Ruling snapshot

• Question: May a Form 1128 seeking a change of annual accounting period, filed after its due date, be treated as timely filed?
• Outcome: approved. The taxpayer acted reasonably and in good faith, relief does not prejudice the government, and the late Form 1128 will be considered timely and processed under Rev. Proc. 2006-45.
• Key authorities: Treas. Reg. sections 1.442-1(b), 301.9100-2, 301.9100-3(a); Rev. Proc. 2006-45, 2006-45 I.R.B. 851.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 200852027 Third Party Communication: None
Release Date: 12/26/2008 Date of Communication: Not Applicable Index Number: 9100.09-00 Person To Contact:
--------------------------------- --------------------, ID No. -------------
--------------- Telephone Number:

---------------------------------------- Refer Reply To: In Re: CC:ITA:B5
--------------- PLR-135952-08
Date:
---------------------------------------
September 24, 2008
---------------------------------

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

This is in reference to a Form 1128, Application to Adopt, Change, or Retain a Tax Year, submitted on behalf of the above-named taxpayer, requesting permission to change its annual accounting period, for federal income tax purposes, from a taxable year ending --------------, to a taxable year ending ------------------, effective for the tax year beginning --------------------------, and ending --------------------------. 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.

The taxpayer represents that the taxpayer's Form 1128 requesting a change in accounting period to a tax year ending --------------------------, was due on or before --------
---------------------------, but was not timely filed. Information furnished indicates that the taxpayer intended to make the change in a timely manner, but through an error or omission, failed to do so in a proper manner. The error was not due to any lack of due diligence or prompt action on the part of Taxpayer, and the taxpayer filed its request for administrative relief shortly after the Form’s due date.

Section 1.442-1(b) of the Income Tax Regulations provides that in order to secure the Commissioner's consent to a change in annual accounting period, the taxpayer must file an application on Form 1128 with the Commissioner within such time and in such manner as is provided in administrative procedures published by the Commissioner. But for a timely filing, the taxpayer’s Form 1128 would be subject to the automatic consent procedures of Rev. Proc. 2006-45, 2006-45 I.R.B. 851, and due on or before the due date (including extensions) of the return of tax required for the short period.

Section 301.9100-3(a) of the regulations 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 taxpayer's late- filed Form 1128 requesting permission to change to a tax year ending ------------------, effective for the tax year beginning --------------------------, and ending ---------------------------
-------, will be considered timely filed.

A copy of this letter ruling and taxpayer's Form 1128 are being forwarded to the service center where the taxpayer files its federal income tax returns, with instructions that the Form 1128 be considered timely filed, and processed in accordance with established procedures under Rev. Proc. 2006-45.

The ruling contained in this letter is based upon facts and representations furnished by the taxpayer, and is limited to the filing of Form 1128. Except as specifically addressed herein, no opinion is expressed as to whether the taxpayer qualifies for the automatic consent procedure or regarding the tax treatment of the subject transaction under the provisions of any other sections of the Internal Revenue Code or Income Tax Regulations that may be applicable thereto. This office has not verified any of the material submitted in support of the requested ruling; verification of factual information, representations, and other data is within the examination jurisdiction of the taxpayer's IRS Industry Director.

Copies of this letter ruling are being provided to the taxpayer’s authorized representative.

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 yours,

/s/ George F. Wright

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

Enclosures:
Copy of this letter
Copy for § 6110 purposes