PLR 201305009: IRS treats a late Form 1128 as timely filed

Plain-English summary

A taxpayer filed Form 1128 late to change its federal tax year from a December 31 year-end to a March 31 year-end. The taxpayer requested relief under § 301.9100-3 shortly after the filing deadline. The IRS concluded that the taxpayer acted reasonably and in good faith, and that relief would not prejudice the government. The IRS treated the late Form 1128 as timely filed, while leaving the underlying eligibility for the accounting-period change to the appropriate IRS service center.

Ruling snapshot

• Question: May a taxpayer receive relief for a late Form 1128 requesting a change in accounting period?
• Outcome: Approved, the late Form 1128 was treated as timely filed.
• 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: 201305009
[Third Party Communication:
Release Date: 2/1/2013
Date of Communication: Month DD, YYYY]
Index Number: 9100.09-00
Person To Contact:
------------------------
--------------, ID No. -----------------
----------------------------
Telephone Number/Fax Number:
------------------------------------------------------------ --------------------- ---------------------
----------------------------
Refer Reply To:
----------------------------
CC:ITA:4
PLR-145003-12
Date: October 31, 2012

Legend:
TIN = ----------------
Year = -------

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

This letter 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 Regulations on Procedure 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.

Revenue Procedure 2006-45, 2006-45 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 has obtained the consent of the Commissioner of the Internal Revenue Service to change its annual accounting period. Section 7.02(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 effectuate the 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 effectuate the change. However, Taxpayer requested an extension of time to file its Form 1128 under § 301.9100-3 shortly after the required time.

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 this case, must be made under the rules of § 301.9100-3. Requests for relief subject to § 301.9100-3 will be granted when the taxpayer establishes that the taxpayer

PLR-145003-12
2

acted reasonably and in good faith, and that the granting of relief will not prejudice the interests 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 interests 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 March 31, effective March 31, Year, is considered timely filed. 1

Because a change in accounting period under Rev. Proc. 2006-45 is under the jurisdiction of the Director, Internal Revenue Service Center, where the taxpayer’s returns are filed, we are returning your application so that you may forward it along with a copy of this letter to the Director, --------- Service Center, within 45 days of the date of this letter. Any further communication regarding this matter should be directed to the Service Center.

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 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 only the granting of § 301.9100-3 relief. We express no opinion regarding the tax treatment of the instant transaction under the provisions of any other sections of the Code or 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 effectuate under Rev. Proc. 2006-45.

A copy of this letter must be attached 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.

1
The taxpayer’s application for a change in accounting period will be processed under Rev. Proc. 2006-45.

PLR-145003-12
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,

Donna Welsh
Senior Technician Reviewer
(Income Tax & Accounting)
Office of Chief Counsel

Enclosures