PLR 1248003: IRS grants more time to file an accounting method change form

Plain-English summary

The IRS granted a taxpayer 30 more days to file the original Form 3115 for an accounting method change involving bonus expenses. The taxpayer's advisor had filed a copy with the IRS but inadvertently failed to attach the original form to the timely filed federal income tax return. The IRS found that the requirements for relief under the section 9100 regulations were satisfied. The ruling did not decide whether the taxpayer otherwise qualified for the accounting method change procedure.

Ruling snapshot

• Question: Could the taxpayer receive more time to file the original Form 3115?
• Outcome: Approved
• Key authorities: IRC § 446(e); Treas. Reg. §§ 301.9100-1 through 301.9100-3; Rev. Proc. 2011-14

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201248003 Third Party Communication: None
Release Date: 11/30/2012 Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.00-00 ------------------, ID No. -------------
Telephone Number:
--------------------
-------------------- Refer Reply To:
---------------------------------------------------- CC:ITA:B02
-------------------------- PLR-109420-12
---------------------- Date:
------------------------------------- August 27, 2012

               TY: -------

Legend

Taxpayer = ---------------------------
Advisor = --------------------------------
Date1 = ----------------------
Date2 = ---------------------------
Date3 = ------------------
Date4 = ------------------
Date5 = -------------------------
Date6 = -------------------
Date7 = -----------------------
Year1 = -------

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

This is in response to the letter dated January 5, 2012, 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 an original Form 3115, Application for Change in
Accounting Method, to change your method of accounting for bonus expenses for the
taxable year beginning Date1 and ending Date2. The request is made in accordance
with §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations.

For taxable year Year1, Taxpayer engaged Advisor to prepare and file its U.S. federal
income tax return and also to prepare a Form 3115. Advisor timely filed Form 7004,
Application for Automatic Extension of Time to File Certain Business Income Tax,
Information, and Other Returns for taxable year Year1. On Date3, Advisor filed a copy
of Form 3115 with the Internal Revenue Service (IRS) national office in accordance with
§ 6.02(3)(a) of Rev. Proc. 2011-14. During Date4, Advisor prepared Taxpayer’s federal
PLR-109420-12 2

income tax return and prepared the return consistent with the accounting method
change requested in Form 3115. On Date5, Taxpayer timely filed its federal income tax
return for the taxable year Year1. However, due to an oversight by Advisor, Advisor
inadvertently failed to attach the original Form 3115 to Taxpayer’s federal income tax
return as required by § 6.02(3)(a) of Rev. Proc. 2011-14. In Date6, Advisor discovered
the oversight and on or about Date7, Advisor informed Taxpayer that as a result of the
oversight, an original Form 3115 was not timely filed.

Rev. Proc. 2011-14 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 the regulations thereunder.

Section 6.02(3)(a) of Rev. Proc. 2011-14 provides that a taxpayer changing a method of
accounting pursuant to Rev. Proc. 2011-14 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.

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.

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 301.9100-3(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 for Taxpayer to file a Form 3115,
requesting permission to change its method of accounting for bonus expenses for
PLR-109420-12 3

Federal income tax purposes, effective for the taxable year ending Date2. The
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 when they are filed.

Except as ruled upon above, no opinion is expressed or implied concerning the federal
income tax consequences arising from Taxpayer’s activities. Specifically, we express
no opinion concerning whether Taxpayer is qualified to file its application for a change in
accounting method under Rev. Proc. 2011-14 or that it otherwise meets the
requirements of that revenue procedure.

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.

Pursuant to the power of attorney on file with this office, a copy of this letter is being
sent to your authorized representatives.

                                    Sincerely,



                                    _______________________________
                                    THOMAS D. MOFFITT
                                    Chief, Branch 2
                                    Office of Associate Chief Counsel
                                    (Income Tax & Accounting)