Consolidated group receives extra time to file duplicate Form 3115

Plain-English summary

A parent corporation and three subsidiaries changed their accounting method for deducting bonuses. The parent timely attached the original Form 3115 to its consolidated return and reflected the change on that return. Its return preparer assumed responsibility for sending the required signed copy to the IRS National Office but failed to do so, then notified the parent after discovering the error. The IRS found that the requirements for discretionary regulatory-election relief were satisfied and granted 30 days to file the copy. The ruling does not decide whether the group qualified for the automatic method change or adopted an appropriate accounting method.

Ruling snapshot

• Question: Could the consolidated group receive extra time to file the required duplicate Form 3115 after its return preparer failed to send it?
• Outcome: Approved, with a 30-day extension
• Key authorities: IRC §§ 162, 446(e), and 461; Treas. Reg. §§ 301.9100-1 and 301.9100-3; Rev. Proc. 2011-14

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201451010
Third Party Communication: None
Release Date: 12/19/2014
Date of Communication: Not Applicable
Index Number: 9100.10-00, 9100.10-01
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:ITA:B01
PLR-111184-14
Date:
Attn: ----------------
September 09, 2014
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Legend:

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

B = ---------------------------

C = -------------------------------------------------------

D = ----------------------------------------

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

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

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

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

Preparer = --------------------------

Dear --------------

This letter is in reply to a private letter ruling request dated December 11, 2013 filed by Taxpayer on behalf of itself and three subsidiaries, B, C, and D requesting an extension of time under § 301. 9100-1(c) of the Procedure and Administration Regulations to file a copy of a Form 3115, Application for Change in Accounting Method, for the taxable year beginning Date 1 and ending on Date 2, with the National Office of the Internal Revenue Service (National Office) as required by section 6.02(3) of Rev. Proc. 2011-14, 2011-1 I.R.B. 330. Taxpayer and its subsidiaries requested an accounting method change under § 461 of the Internal Revenue Code for the deduction
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of bonuses under § 162. Taxpayer's private letter ruling request was made in accordance with § 301. 9100-3.

FACTS

On Date 3, Taxpayer timely filed its consolidated federal income tax return for the taxable year ending Date 2, along with the original of the Form 3115. However, Taxpayer did not file a copy of the Form 3115 with the National Office as required by Rev. Proc. 2011-14. Preparer (Taxpayer's accountant) assumed responsibility for filing a copy of the Form 3115 with the National Office, but due to an error on its part, failed to do so. On Date 4, Preparer discovered that the copy of the Form 3115 had not been filed with the National Office and informed Taxpayer of the fact. Soon thereafter, Taxpayer filed this request for an extension of time to file a copy of the Form 3115 with the National Office. Taxpayer’s consolidated tax return for the taxable year beginning on Date 1 and ending on Date 2 reflected the change in accounting method.

LAW AND ANALYSIS

Rev. Proc. 2011-14 provides the procedures by which a taxpayer may obtain automatic consent to change certain methods of accounting. A taxpayer satisfying all applicable requirements of this revenue procedure is deemed to have obtained the consent of the Commissioner to change its method of accounting under § 446(e) and the associated Income Tax Regulations.

Section 6.02(3)(a) of Rev. Proc. 2011-14 provides that a taxpayer changing a method of accounting pursuant to Rev. Proc. 2011-14 must complete two separate steps. Step one requires the taxpayer to attach the original Form 3115 to the taxpayer's timely filed original federal income tax return for the year of change. Step two requires the taxpayer to file a signed copy of the Form 3115 with either the National Office or Odgen, Utah service center no earlier than the first day of the year of change, and no later than the date the original Form 3115 is filed with the taxpayer's federal income tax return for the year of change.

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.
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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 necessary copy of the Form 3115 with the National Office. 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 3115.

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 the ruling, 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 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 Taxpayer, 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, a copy of this letter is being sent to Taxpayer's authorized representative.

Sincerely,

LEWIS K BRICKATES
Chief, Branch 1
Office of Associate Chief Counsel
(Income Tax & Accounting)