Late tax-year change application is treated as timely

Plain-English summary

A corporation filed Form 1128 after the deadline for automatically changing its annual accounting period from a calendar year to a July 31 year-end. It sought discretionary relief under the § 301.9100 regulations soon after the missed deadline. The IRS found that the corporation acted reasonably and in good faith and that relief would not prejudice the government. It treated the late Form 1128 as timely filed, while expressly declining to decide whether the requested tax-year change otherwise qualified under the Code or Rev. Proc. 2006-45.

Ruling snapshot

• Question: Should the corporation's late Form 1128 requesting a July 31 tax year be treated as timely filed?
• Outcome: Approved. The late application is considered timely under Treas. Reg. § 301.9100-3.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b)(1), 301.9100-3; Rev. Proc. 2006-45

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201436044
Third Party Communication: None
Release Date: 9/5/2014
Date of Communication: Not Applicable
Index Number: 9100.09-00
Person To Contact:
-----------------------
--------------------, ID No. ----------------
-----------------------
Telephone Number:
--------------------------------------------- --------------------
----------------------
Refer Reply To:
CC:ITA:B05
PLR-149814-13
Date:
May 28, 2014

EIN: ----------------

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

This is in reference to the taxpayer’s request that its Form 1128, “Application To Adopt, Change, or Retain a Tax Year,” be considered timely filed under an exercise of the Commissioner of the Internal Revenue Service discretionary authority in § 301.9100-3 of the Procedures and Administration Regulations. Taxpayer filed a late Form 1128 to change its taxable year, for federal income tax purposes, from a taxable year ending December 31, to a taxable year ending July 31, effective July 31, ------.

Rev. Proc. 2006-45, 2006-2 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 will be deemed to have obtained the approval of the Commissioner to change its annual accounting period. Section 7.01(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 effect such change.

The information furnished indicates that the taxpayer did not file its Form 1128 by the due date of the return for the short period required to effect such change and did not request an extension of time to file its return. However, the taxpayer filed its Form 1128 under § 301.9100-3 soon thereafter.

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 the instant case, must be made under the rules of § 301.9100-3. Request for relief subject to § 301.9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good faith, and that the granting of relief will not prejudice the interest of the government.

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Based on the facts and information submitted and the representations made, we conclude that the taxpayer has acted reasonably and in good faith, and that the granting of relief will not prejudice the interest of the government. Accordingly, the taxpayer has satisfied the requirements of the regulations for the granting of relief, and the taxpayer’s late-filed Form 1128 requesting to change to a taxable year ending July 31, effective July 31, ------, is considered timely filed.

Because a change in 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 have forwarded the application to the Director, -----------------Service Center. 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 the granting of § 301.9100-3 relief only. We express no opinion regarding the tax treatment of the instant transaction under the provisions of any other section of the Code or the 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 effected under Rev. Proc. 2006-45.

A copy of this letter must be attached to any income tax return to which it is relevant. Alternatively, the taxpayer filing its returns electronically may satisfy this requirement by attaching a statement to its return that provides the date and control number of the letter ruling.

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.

The taxpayer submitted more user fee than what is required under Rev. Proc. 2013-1, 2013-1 I.R.B. 1. A portion of the user fee submitted by the taxpayer will be refunded in a separate correspondence.

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3

If there are any questions, please contact the person whose name and phone number are shown in the heading of this letter.

Sincerely,

Seoyeon Sharon Park
Assistant to the Branch Chief, Branch 5
Office of Associate Chief Counsel
(Income Tax & Accounting)