PLR 200905017: Corporation's late tax-year change application was treated as timely

Plain-English summary

A corporation filed Form 1128 after the deadline to change its federal tax year from a June 30 year-end to a December 31 year-end. It requested discretionary relief soon after missing the deadline. The IRS found that the corporation acted reasonably and in good faith and that relief would not prejudice the government, so it treated the late Form 1128 as timely filed. The IRS forwarded the application to the relevant service center and did not decide whether the requested tax-year change was substantively permitted or qualified for the automatic procedures in Revenue Procedure 2006-45.

Ruling snapshot

• Question: Could the corporation's late Form 1128 seeking a calendar tax year be treated as timely filed?
• Outcome: Approved for filing-timeliness relief only, without deciding whether the requested accounting-period change was permitted
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b)(1) and 301.9100-3; Rev. Proc. 2006-45

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200905017
Third Party Communication: None
Release Date: 1/30/2009
Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.09-00
--------------------, ID No. -------------
Telephone Number:
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------------------------------------------ Refer Reply To:
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CC:ITA:B04
------------------------------------------ PLR-129164-08
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Date:
October 14, 2008

Legend:

Year = -------

Corporation = ---------------

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

This letter ruling refers to a request that Corporation’s Form 1128, Application To Adopt, Change, or Retain a Tax Year, be considered timely filed under the authority in § 301.9100-3 of the Regulations on Procedure and Administration. Corporation filed a late Form 1128 to change its accounting period, for federal income tax purposes, from a taxable year ending June 30, to a taxable year ending December 31, effective December 31, Year.

Rev. Proc. 2006-45, 2006-2 C.B. 851, provides procedures for certain corporations to obtain automatic approval to change their annual accounting period to a calendar year under § 442 of the Internal Revenue Code. A corporation complying with all the applicable provisions of this revenue procedure has obtained the approval of the Commissioner of the Internal Revenue Service to change its annual accounting period. Section 7.02(2) of Rev. Proc. 2006-45 provides that a Form 1128 filed pursuant to the revenue procedure will be considered timely filed for purposes of § 1.442-1(b)(1) of the Income Tax Regulations only if it is filed on or before the due date (including extensions) for filing the federal income tax return for the first effective year.

The information furnished indicates that Corporation did not file its Form 1128 by the due date of the return for the short period required to effectuate the change. However, Corporation 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. 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 conclude that Corporation has acted reasonably and in good faith, and that the granting of relief will not prejudice the interests of the government. Accordingly, Corporation has satisfied the requirements of the regulations for the granting of relief, and its late filed Form 1128 requesting to change to December 31, effective December 31, Year, is considered timely filed.

Because a change in accounting period under Rev. Proc. 2006-45 is under the jurisdiction of the Director, Internal Revenue Service Center, where Corporation’s returns are filed, we have forwarded the application to the Director, Ogden, Utah Service Center. Any further communication regarding this matter should be directed to the Service Center.

This ruling is based upon facts and representations that Corporation submitted, accompanied by a penalties 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 sections of the code or 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 Corporation 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. 2006-45.

A copy of this letter must be attached to any income tax return to which it is relevant. 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, a copy of this letter is being sent to your authorized representative.

Sincerely,

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

Enclosure