PLR 1333001: IRS grants more time to file a LIFO election form

Plain-English summary

The IRS granted a taxpayer 30 more days to file Form 970, the application to use the LIFO inventory method. The taxpayer had adopted the LIFO method but discovered after changing accounting firms that it had not timely filed the form. The IRS found that the taxpayer acted reasonably and in good faith and that the extension would not prejudice the government's interests. The ruling did not express an opinion on whether the taxpayer had correctly used the LIFO method.

Ruling snapshot

• Question: May the taxpayer receive more time to file Form 970 after adopting the LIFO inventory method?
• Outcome: Approved, with a 30-day extension.
• Key authorities: IRC § 472; Treas. Reg. §§ 1.472-3, 301.9100-1 through 301.9100-3.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201333001 Third Party Communication: None
Release Date: 8/16/2013 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-103180-13
Date: May 9, 2013

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

Legend

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

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

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

Year 1 = -------

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

This letter is in reply to a private letter ruling request filed by Taxpayer. Taxpayer
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.
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. Taxpayer was formed on Date
1, and the Form 970 was to have been filed by Taxpayer for the taxable year ending
Date 2.

Upon switching accounting firms, Taxpayer discovered in Year 1 that it had failed to
complete the Form 970, for the taxable year ending Date 2. Taxpayer states that it was
required to file a Form 970 because it implemented the LIFO inventory method
PLR-103180-13 2

described in § 472 since the year ending Date 2, and has used the LIFO inventory
method for all subsequent taxable years. Taxpayer also represents that the LIFO
inventory method was used by Taxpayer in its reports to shareholders, partners, or other
proprietors, to beneficiaries, and for credit purposes for the taxable year ending Date 2 and
for all subsequent taxable years. Promptly after discovery of this failure to timely file
Form 970, Taxpayer filed this request for an extension of time to file the Form 970.

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 Taxpayer to file the missing Form 970. 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, and send it to the service center in which Taxpayer
files its return.

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.
PLR-103180-13 3

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.

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

                                            Sincerely,




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