PLR 200934005: Late tax-year change application accepted

Plain-English summary

The IRS granted relief to a taxpayer that failed to timely file Form 1128 to change its annual accounting period. The taxpayer represented that the late filing resulted from an error or omission despite intending to make the change timely, and that it acted promptly after the due date. The IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. The taxpayer was required to file a new Form 1128 with the national office within 45 days and attach a copy of the ruling.

Ruling snapshot

• Question: Could the taxpayer's late Form 1128 be treated as timely for its requested accounting-period change?
• Outcome: Approved, subject to refiling within 45 days
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1 and 301.9100-2 through 301.9100-3; IRC § 6110(k)(3)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200934005
Third Party Communication: None
Release Date: 8/21/2009
Date of Communication: Not Applicable
Index Number: 9100.09-00
Person To Contact:
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Refer Reply To:
In Re: CC:ITA:B5
---------------------------------------------- PLR-106654-09 Date:
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May 05, 2009
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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 52-53 week taxable year ending -------------------------------------------, to a 52-53 week 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 the 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. The taxpayer represents that it is not qualified to change its annual accounting period pursuant to the automatic consent procedures of Rev. Proc. 2006-45, 2006-45 I.R.B. 851.

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.
PLR-106654-09
2

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. The taxpayer must file a Form 1128 requesting permission to change to a tax year ending -----------------------
------------------------, effective for the tax year beginning --------------------- and ending -------
------------ with the national office within 45 days of the date of this ruling. A copy of this ruling should be attached to the Form 1128.

The ruling contained in this letter is based upon facts and representations furnished by the taxpayer. Except as specifically addressed herein, no opinion is expressed 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 representatives.

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,

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

Enclosure:
Copy for § 6110 purposes