PLR 1317006: IRS grants extra time to file a LIFO election

Plain-English summary

The IRS granted a taxpayer 30 additional days to file Form 970, the form used to elect the LIFO inventory method. The taxpayer had received inventory during an internal restructuring but had not completed the required form. The IRS found that the requirements for relief were satisfied based on the submitted facts and representations. The ruling did not express an opinion on whether the taxpayer correctly used the LIFO method or on the restructuring itself.

Ruling snapshot

• Question: Whether the taxpayer could receive extra time to file Form 970 to elect the LIFO inventory method.
• Outcome: Approved, with a 30-day extension.
• Key authorities: IRC § 472; Treas. Reg. §§ 301.9100-1 through 301.9100-3 and § 1.472-3.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201317006 Third Party Communication: None
Release Date: 4/26/2013 Date of Communication: Not Applicable
Index Number: 9100.11-00
Person To Contact:
---------------------------- ------------, ID No. --------------
Attention: ---------------------------- Telephone Number/Fax Number:
----------------------------------------- ---------------------- ---------------------
---------------------------------- Refer Reply To:
CC:ITA:6
PLR-146371-12
Date: Jan. 24, 2013

In Re: Request for Extension of Time to File Form 970, Application To Use LIFO
Inventory Method.

Legend

Parent = ----------------------------
------ -----------------

Taxpayer = -----------------------------------------
------ -----------------

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

Date 2 = ---------------------------

Date 3 = ----------------------------

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

This letter is in reply to a private letter ruling request dated October 24, 2012, filed by
Parent on behalf of Taxpayer. Parent requests an extension of time under § 301.9100-
1(c) of the Procedure and Administration Regulations to file Form 970, Application To
Use LIFO Inventory Method, on behalf of Taxpayer. Taxpayer elected the last-in, first-
out inventory method described in § 472 of the Internal Revenue Code (LIFO inventory
method) for its inventory and was required by § 1.472-3(a) of the Income Tax
Regulations to file a Form 970. The Form 970 was to have been filed by Parent on
behalf of Taxpayer for the taxable year, beginning Date 1 and ending Date 2.
PLR-146371-12 2

During a routine internal review of Parent’s Date 1 to Date 2 tax return, Parent
discovered on Date 3 that it failed to complete the Form 970 on behalf of Taxpayer, for
the taxable year ending Date 2. Parent states that Taxpayer was required to file Form
970 for this taxable year because an internal restructuring had occurred during the year
where Taxpayer had received inventory, which Taxpayer subsequently valued under the
LIFO Inventory Method. Prior to the restructuring, Taxpayer held no inventory.
Promptly after discovery of this failure to timely file Form 970, Parent filed on behalf of
Taxpayer this request for an extension of time to file the Form 970.

Parent represents that Taxpayer implemented the LIFO inventory method described in
§ 472 for the taxable year ending Date 2 and has used the LIFO inventory method for all
subsequent taxable years. Parent also represents that the LIFO inventory method was
used in its reports to shareholders, partners, or other proprietors, to beneficiaries, and
for credit purposes.

Section 472 provides that a taxpayer may use the LIFO method in inventorying goods
specified in an application to use such method, filed at such time, and in such manner,
as the Secretary may prescribe.

Section 1.472-3 provides that the LIFO inventory method may be adopted and used
only if the taxpayer files with its income tax return for the taxable year as of the close of
which the method is first to be used in a statement of its election to use such inventory
method. The statement is to be made on Form 970.

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
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 Parent to file the missing Form 970 for Taxpayer.
PLR-146371-12 3

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 Form 970.

The ruling contained in this letter is based upon information and representations
submitted by Parent 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 has correctly
used the LIFO inventory method. We also have no opinion as to the internal
restructuring of Parent that occurred in the taxable year ending Date 2.

This ruling is directed only to Parent, 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 Parent’s authorized representatives. We are also sending a copy of this
letter to the appropriate operating division director.

                                              Sincerely,




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