PLR 1142004: IRS grants extra time to file an accounting-method change request

Plain-English summary

The IRS granted a taxpayer additional time to file Form 3115 with a federal income tax return. The form requested permission to change the taxpayer's accounting method for advance payments under the procedures of Rev. Proc. 2008-52. The taxpayer had timely filed a duplicate copy with the IRS, but its original form was not attached to a timely filed return because of a mailing oversight. The IRS treated the form attached to the later-filed return as timely, while expressing no opinion on other requirements of the revenue procedure or on the taxpayer's return-filing deadline.

Ruling snapshot

• Question: May the taxpayer receive an extension of time under Treas. Reg. §§ 301.9100-1 and 301.9100-3 to file Form 3115 with its return?
• Outcome: Approved.
• Key authorities: IRC §§ 446 and 6110(k)(3); Treas. Reg. §§ 301.9100-1 and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201142004 Third Party Communication: None
Release Date: 10/21/2011 Date of Communication: Not Applicable
Index Number: 9100.00-00
Person To Contact:
------------------------ ------------------------------, ID No. ------------
--------- -----------------
----------------------------------------- Telephone Number:
----------------------------------- --------------------
----------------------------------- Refer Reply To:
CC:ITA:B02
PLR-104812-11
Date:
July 20, 2011

              TY: -------

Legend

Taxpayer= -----------------------------------------
Advisor= ----------------------
DateA= ----------------------
DateB= --------------------------
Year1= -------

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

This is in response to the letter dated -----------------------, submitted on your behalf by
your authorized representative. In the letter you request an extension of time to file with
your Year1 federal income tax return a Form 3115, Application for Change in
Accounting Method, to change your method of accounting for advance payments for the
taxable year beginning DateA and ending DateB. The request is made in accordance
with §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations.

Taxpayer engaged Advisor to assist in preparing an accounting method change request
for tax year ending DateB in accordance with the procedures in Rev. Proc. 2008-52.
The item for which Taxpayer requested a method change was advance payments
received pursuant to its licensing and research service agreements. Advisor prepared
the Form 3115 and provided it to the taxpayer so the taxpayer could attach it to its Form
1120 for Year1 and file a copy of the Form 3115 with the Internal Revenue Service
(IRS) national office on or before the date it filed its return in accordance with section
6.02(3)(a) of Rev. Proc. 2008-52.

For Year1, Taxpayer timely filed a duplicate of its original Form 3115 with the IRS
national office as required by section 6.02(3)(a) of Rev. Proc. 2008-52, 2008-2 C.B.
587, to change its method of accounting for advance payments for the taxable year
PLR-104812-11 2

ending DateB. However, due to an oversight by Taxpayer’s mail room, Taxpayer
inadvertently failed to timely file its Federal income tax return and original Form 3115 for
the taxable year ending DateB. Thus, the original Form 3115 that accompanied the
return was not attached to a timely filed Federal income tax return as required by
section 6.02(3)(a) of Rev. Proc. 2008-52. Upon discovery of this oversight, Taxpayer
immediately contacted Advisor who instructed Taxpayer to request an extension of time
under § 301.9100 of the regulations to file the Form 3115 with Taxpayer’s Year1 return.

Rev. Proc. 2008-52 provides the procedures by which a taxpayer may obtain automatic
consent to change certain methods of accounting. A taxpayer complying with all the
applicable provisions of this revenue procedure has obtained the consent of the
Commissioner to change the taxpayer’s method of accounting under § 446(e) of the
Internal Revenue Code and regulations thereunder.

Section 6.02(3)(a) of Rev. Proc. 2008-52 provides that a taxpayer changing a method of
accounting pursuant to Rev. Proc. 2008-52 must complete and file a Form 3115 in
duplicate. The original must be attached to the taxpayer’s timely filed (including
extensions) original federal tax return for the year of change, and a signed copy 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.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will
use to determine whether to grant an extension of time to make an election. 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 § 301.9100-2.

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a
reasonable extension of time under the rules set forth in §§ 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 301.9100-3(a) provides that requests for relief under § 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.

Based solely on the facts and representations submitted, including affidavits, we
conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied.
Accordingly, an extension of time is hereby granted Taxpayer to file a Form 3115,
requesting permission to change its method of accounting for advance payments,
PLR-104812-11 3

effective for the taxable year ending DateB. In this regard, we will consider the Form
3115 that Taxpayer attached to its Year1 Form 1120 to be timely filed. A copy of this
letter should be associated with the Form 3115 that accompanied Taxpayer’s Federal
income tax return filed for the taxable year ending DateB.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter. Specifically, we express no opinion concerning whether Taxpayer is qualified
to file its application for a change in accounting method under Rev. Proc. 2008-52 or
that it otherwise meets the requirements of that revenue procedure. This ruling letter
does not grant Taxpayer an extension of time for filing Taxpayer’s federal income tax
return for Year1.

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.

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the request for rulings, it is subject to verification on examination.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representatives.

                                   Sincerely,


                                   _Norma C. Rotunno ____________
                                   NORMA C. ROTUNNO
                                   Senior Technician Reviewer, Branch 2
                                   Office of Associate Chief Counsel
                                   (Income Tax & Accounting)

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