PLR 1338022: IRS grants more time to provide a duplicate accounting-method form

Plain-English summary

A taxpayer filed Form 3115 to change its accounting method for certain securities while two refund suits were pending. The taxpayer sent a duplicate form to government counsel in one suit but mistakenly believed that counsel in the second suit would forward the form, and the second copy was sent later. The IRS found that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied and granted an extension of time, concluding that the taxpayer had met the duplicate-copy requirement in Rev. Proc. 97-27. The ruling did not decide whether the taxpayer otherwise qualified to make the accounting-method change.

Ruling snapshot

• Question: May the taxpayer receive more time to provide a duplicate Form 3115 to government counsel under Rev. Proc. 97-27?
• Outcome: Approved, extension granted.
• Key authorities: Treas. Reg. §§ 301.9100-1 through 301.9100-3; Rev. Proc. 97-27; IRC § 6110.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201338022 Third Party Communication: None
Release Date: 9/20/2013 Date of Communication: Not Applicable
Index Number: 9100.00-00
Person To Contact:
------------------------------------ --------------------------, ID No. ----------------
--------------------------- -----------------
---------------------------------------------- Telephone Number:
---------------------- ----------------------
-------------------------------------- Refer Reply To:
CC:FIP:1
PLR-117786-13
Date:
June 18, 2013

Legend:

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

S1 = ----------------------------------------------

Month = -----------

Year = -------

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

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

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

Date 4 = ------------------------

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

   This ruling responds to a letter dated April 12, 2013, filed by Parent on behalf of

S1 (“Taxpayer”). Taxpayer requests an extension of time pursuant to sections
301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to file a
duplicate copy of a signed Form 3115, Application for Change in Accounting Method, for
the taxable year ending Date 1, with government counsel pursuant to section 6.03 of
Rev. Proc. 97-27.
PLR-117786-13 2

Facts:

    On Date 2, Parent, on behalf of Taxpayer, executed and filed with the IRS

National Office a Form 3115 to change its method of accounting to re-characterize
certain securities as equity, rather than debt, and to reverse the previously-amortized
related premium on such securities. At the time the Form 3115 was submitted,
Taxpayer was a party to two pending refund suits before the federal courts. Pursuant to
section 6.03 of Rev. Proc. 97-27, Taxpayer should have sent duplicate copies of the
Form 3115 to both sets of government counsel. On Date 3, Taxpayer sent a copy of the
Form 3115 to its legal counsel representing it in one of the refund suits (Counsel 1).
Counsel 1 sent a copy of the Form 3115 to the government counsel for that refund suit
and to a second legal counsel representing Taxpayer in the second refund suit (Counsel
2). Taxpayer believed that Counsel 2 would forward a copy of the Form 3115 to the
government counsel for the second refund suit. On Date 4, Counsel 2 discovered that
he failed to forward a copy of the Form 3115 to the government counsel in the second
refund suit and sent a copy of the Form 3115 to the government counsel. Upon
learning that the duplicate copy was provided to one set of government counsel on Date
3 and the other set of counsel on Date 4, Taxpayer submitted this request for relief
under sections 301.9100-1 and 301.9100-3.1

Law and Analysis:

   Rev. Proc. 97-27 sets forth the general procedures for obtaining the advance

consent of the IRS to change a method of accounting. A taxpayer otherwise within the
scope of Rev. Proc. 97-27 that is before a federal court with respect to any income tax
issue may request a change in method of accounting. Section 6.03 of Rev. Proc. 97-27
requires such taxpayer to provide a copy of the IRS Form 3115 to counsel for the
government no later than the date the taxpayer files the original IRS Form 3115 with the
IRS National Office.

   Under section 301.9100-1(c), the Commissioner has discretion to grant a

reasonable extension of time under the rules set forth in sections 301.9100-2 and
301.9100-3 to make a regulatory election. 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 301.9100-1 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
1
The government counsel in the second refund suit who received the duplicate copy of the Form 3115 on
Date 4 has been informed about this private letter ruling requesting 9100 relief and has no objections to
its issuance.
PLR-117786-13 3

301.9100-3 provides extensions of time for making regulatory elections that do not meet
the requirements for an automatic extension under section 301.9100-2.

    Section 301.9100-3(a) provides that requests for relief under section 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.

Conclusion:

   Based solely on the facts and representations submitted, we conclude that the

requirements of section 301.9100-3 have been satisfied. Accordingly, Taxpayer is
granted an extension of time to provide the additional copy of the Form 3115 to
government counsel. Because such additional copy was provided on Date 3 and Date
4, Taxpayer has satisfied the requirements of section 6.03 of Rev. Proc. 97-27 with
respect to its Form 3115 filed on Date 2.

  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 set forth above, we express no opinion concerning the tax

consequences of the facts described above under any other provision of the Code.
Specifically, we express no opinion as to whether Taxpayer qualifies to make its change
in accounting method under the provisions of Rev. Proc. 2011-14. Nor do we express
any opinion as to whether Taxpayer has changed to an appropriate method of
accounting.

  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.
PLR-117786-13 4

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representatives.

                                       Sincerely,


                                       __________________________________
                                       Andrea M. Hoffenson
                                       Assistant to the Branch Chief, Branch 1
                                       Office of Associate Chief Counsel
                                       (Financial Institutions and Products)

Enclosures:
Copy of this letter
Copy for section 6110 purposes

cc: