PLR 200948041: IRS granted an extension for a late Form 1128 to change the taxpayer's year-end

Plain-English summary

The IRS treated a corporation's late Form 1128 as timely filed for a requested change from a December 31 tax year to a March 31 tax year. The taxpayer sought relief under Treas. Reg. § 301.9100-3 after missing the filing deadline under Rev. Proc. 2006-45. The IRS found that the taxpayer acted reasonably and in good faith and that granting relief would not prejudice the government. The taxpayer was required to file the Form 1128 within 30 days of the ruling letter, and the ruling expressed no opinion on whether the requested tax-year change was otherwise permitted.

Ruling snapshot

• Question: May a late Form 1128 for changing a tax year be treated as timely under Treas. Reg. § 301.9100-3?
• Outcome: Approved
• 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: 200948041
Third Party Communication: None
Release Date: 11/27/2009
Date of Communication: Not Applicable
Index Number: 9100.00-00
Person To Contact:
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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-137558-09
Date: August 31, 2009

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 December 31, to a taxable year ending March 31, effective March 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 under § 442 of the Internal Revenue Code. A corporation 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. 2006-45 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 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 requested an extension of time to file 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), such as the instant case, must be made under the rules of § 301.9100-3. Request for
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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 request to change to March 31, effective March 31, Year, is considered timely filed.

Because a change in period under Rev. Proc. 2006-45 is under the jurisdiction of the Director, Internal Revenue Service Center, taxpayer’s Form 1128 must be filed within 30 days from the date of this letter with the Director, Internal Revenue Service Center, Attention: ENTITY CONTROL, where taxpayer files its federal income tax return.

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 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. 2006-45.

A copy of this letter must be attached to taxpayer’s Form 1128 and 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.

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

Sincerely yours,

William A. Jackson
Branch Chief, Branch 5
(Income Tax & Accounting)
Office of Chief Counsel