PLR 1142011: IRS grants late-filing relief for a tax-year change application

Plain-English summary

The IRS treated a corporation's late Form 1128 as timely under the rules for extensions of time for regulatory elections. The form requested a change from a September 30 tax year to a December 31 tax year, but it was not filed by the deadline for the required short-period return and no filing extension had been requested. The IRS found that the taxpayer acted reasonably and in good faith and that granting relief would not prejudice the government. The ruling grants relief under the extension rules only, and does not decide whether the requested tax-year change is otherwise permitted.

Ruling snapshot

• Question: May the taxpayer's late Form 1128 requesting a change in tax year be treated as timely under § 301.9100-3?
• Outcome: Approved.
• Key authorities: IRC §§ 301, 442, 9100, and 6110(k)(3); Rev. Proc. 2006-45; Rev. Proc. 2007-64.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201142011 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:B05
PLR-126579-11
Date:
July 08, 2011

Taxpayer: --------------------------------
-----------------------
Year: -------

Dear -----------------------

This ruling is in reference to 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 Procedures and Administration Regulations Taxpayer filed a late
Form 1128 to change its accounting period, for federal income tax purposes, from a
taxable year ending September 30, to a taxable year ending December 31, effective
December 31, Year.

Rev. Proc. 2006-45, 2006-2 C.B. 851, as modified and clarified by Rev. Proc. 2007-64,
2007-2 C.B. 818, 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 7.02(2)(a) 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 Taxpayer did not file its Form 1128 by the due
date of the return for the short period required to effect such change and did not request
an extension of time to file its return. However, Taxpayer 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),
such as the instant case, must be made under the rules of § 301.9100-3. Request for
PLR-126579-11 2

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 Form 1128 requesting to change to a taxable year ending December 31,
effective December 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, where taxpayer’s returns are filed, we have
forwarded the application to the Director, ------------------Service Center. Any further
communication regarding this matter should be directed to the Service Center.

This ruling is based upon facts and representations submitted by Taxpayer and
accompanied by a penalty 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
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 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 any income tax return to which it is relevant.
Alternatively, taxpayer filing its returns electronically may satisfy this requirement by
attaching a statement to its return that provides the date and control number of the letter
ruling.
PLR-126579-11 3

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,



                                    Amy J. Pfalzgraf
                                    Senior Counsel, Branch 5
                                    (Income Tax & Accounting)
                                    Office of Chief Counsel

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