PLR 1224005: IRS allows late filing of accounting-method forms

Plain-English summary

The IRS granted a taxpayer 30 days to attach the original Forms 3115 to the correct tax return for two accounting-method changes. The taxpayer had attached the forms to an earlier year's return even though the forms and signed copies were otherwise timely filed. The changes concerned inventory cost allocation under § 263A and dollar-value LIFO inventory pools. The ruling did not decide whether the taxpayer otherwise qualified for either accounting-method change.

Ruling snapshot

• Question: Could the taxpayer receive more time to attach the original Forms 3115 to the correct year's return?
• Outcome: Approved, with 30 days from the ruling date to complete the filing.
• Key authorities: IRC §§ 263A and 446; 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: 201224005 Third Party Communication: None
Release Date: 6/15/2012 Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.10-01 -----------, ID No. -----------------
Telephone Number/Fax Number:
--------------------- ---------------------
---------------------------- Refer Reply To:
--------------------------------------- CC:ITA:6
---------------- PLR-108559-12
--------------------------- Date:
March 15, 2012

In Re: Request for Extension of Time to File Form 3115, Application for Change in
Method of Accounting.

Legend

Taxpayer = ----------------------------
EIN: ----------------

Preparer = ----------------------

Year 1 = -------

Year 2 = -------

Date 1 = ----------------------

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

This letter is in reply to a private letter ruling request dated January 17, 2012, filed on
behalf of Taxpayer by its authorized representative, Preparer. Taxpayer requests an
extension of time under § 301.9100-1(c) of the Procedure and Administration
Regulations to file signed Forms 3115, Applications for Change in Accounting Method,
for the taxable year beginning Date 1, concerning inventory costs and goods purchased
for resale, as required by section 6.02(3) of Rev. Proc. 2008-52, 2008-2 C.B. 587. This
request was made in accordance with § 301.9100-3.

Taxpayer engaged Preparer to prepare its Year 1 federal income tax return. After
consulting with Preparer, Taxpayer decided to change its method of identifying and
allocating costs to inventory to comply with § 263A of the Internal Revenue Code and to
change the number and composition of pools under the dollar-value LIFO method of
identifying inventory to comply with § 1.472-8(b)(1) of the Income Tax Regulations.
PLR-108559-12 2

Taxpayer stated that the former change is described in section 11.02 of the APPENDIX
of Rev. Proc. 2008-52 and that the latter change is described in section 22.10 of the
APPENDIX of Rev. Proc. 2008-52. Taxpayer decided to implement both changes in
method of accounting for Year 2 and Taxpayer implemented the proposed changes on
its Year 2 tax return.

Preparer prepared the Forms 3115 and copies of the Forms 3115 were timely filed with
the IRS national office in accordance with section 6.02(3) of Rev. Proc. 2008-52.
However, erroneously, the originals of the Forms 3115 were attached to Taxpayer’s
timely filed Year 1 tax return, instead of Taxpayer’s timely filed Year 2 tax return as
required by section 6.02(3) of Rev. Proc. 2008-52.

Taxpayer is under examination for the Year 1 taxable year. While helping Taxpayer
prepare for the opening conference with an examining agent, Preparer discovered the
failure to attach the original Forms 3115 to Taxpayer’s Year 2 tax return. Promptly,
Taxpayer filed this request for an extension of time to file original Forms 3115 with
Taxpayer’s timely filed Year 2 tax return.

Rev. Proc. 2008-52 provides the procedures by which a taxpayer may obtain automatic
consent to change certain methods of accounting. A taxpayer satisfying all applicable
requirements of this revenue procedure is deemed to have obtained the consent of the
Commissioner to change its method of accounting under § 446(e) and associated
regulations.

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 two separate steps. Step
one requires the taxpayer to attach the original Form 3115 to the taxpayer’s timely filed
original federal income tax return for the year of change. Step two requires the taxpayer
to file a signed copy of the Form 3115 with the national office no earlier than the first
day of the year of change, and no later than the date the original Form 3115 is filed with
the taxpayer’s federal income tax return.

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 § 301.9100-2 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.

Requests for relief under § 301.9100-3 will be granted when a taxpayer provides
evidence to establish to the satisfaction of the Commissioner (1) that the taxpayer acted
PLR-108559-12 3

reasonably and in good faith, and (2) that granting relief will not prejudice the interests
of the Government. See § 301.9100-3(a).

Based solely on the facts and representations submitted, we conclude that the
requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Accordingly, we
hereby grant an extension of time for Taxpayer to file the necessary originals of the
Forms 3115 with its Year 2 federal income tax return. This extension shall be for a
period of 30 days from the date of this ruling. Please attach a copy of this ruling to the
Forms 3115.

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

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 as to whether Taxpayer qualifies to make
either of its changes in accounting method under the provisions of Rev. Proc. 2008-52.
Nor do we express any opinion as to whether Taxpayer has changed to appropriate
methods of accounting.

This ruling is directly only to Taxpayer, who requested it. Section 6110(k)(3) provides
that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, copies of this letter are
being sent to Taxpayer’s authorized representatives.

                                              Sincerely,




                                              ROY HIRSCHHORN
                                              Chief, Branch 6
                                              Office of Associate Chief Counsel
                                              (Income Tax & Accounting)

Enclosures (2):
copy of this letter
copy for section 6110 purposes

cc: