Late accounting-period application is treated as timely filed

Plain-English summary

A taxpayer filed Form 1128 late to change from a calendar tax year to a June 30 year-end. It submitted both the form and its request for discretionary relief within 90 days after the filing deadline. The IRS concluded that the taxpayer acted reasonably and in good faith and that accepting the late application would not prejudice the government. It therefore directed the service center to treat and process Form 1128 as timely filed. The ruling addressed only timeliness and did not decide whether the taxpayer otherwise qualified to make the requested accounting-period change.

Ruling snapshot

• Question: Could the late Form 1128 application to change the taxpayer's annual accounting period be treated as timely?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 1.442-1(b), 301.9100-2, and 301.9100-3; Rev. Proc. 2006-45

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201452004 Third Party Communication: None
Release Date: 12/26/2014 Date of Communication: Not Applicable
Index Number: 9100.09-00
Person To Contact:
------------------, ID No. -----------
---------------------- Telephone Number:
------------------------ --------------------
--------------------------- Refer Reply To:
CC:ITA:B05
Attention: ----------------------- --------------------------- PLR-115012-14
Date:
September 24, 2014

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

Legend

Taxpayer = ----------------------
Year = ------
Service Center A = ------------------------------------------

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

This is in reference to a request by the above-named taxpayer that its Form 1128,
Application to Adopt, Change, or Retain a Tax Year, be considered timely filed under
§ 301.9100-3 of the Procedures and Administration Regulations.

Taxpayer filed a late Form 1128 to change its annual accounting period for federal
income tax purposes, from a taxable year ending December 31 to a taxable year ending
on June 30, effective for the taxable year beginning January 1, Year, and ending June
30, Year. Taxpayer submitted the request for discretionary administrative relief, as well
as the Form 1128, within 90 days from the due date for the Form 1128.

Section 1.442-1(b) of the Income Tax Regulations provides that, in order to secure the
consent of the Commissioner of the Internal Revenue to a change in annual accounting
period, a taxpayer must file an application (generally on Form 1128) with the
Commissioner within such time and in such manner as is provided in administrative
procedures published by the Commissioner. Revenue Procedure 2006-45, as modified
and clarified by Rev. Proc. 2007-64, 2007-2 C.B. 818, provides the exclusive
procedures whereby certain corporations may obtain automatic consent to change their
accounting periods. Section 7.02(2)(a) of Rev. Proc. 2006-45 provides that a Form
1128 filed pursuant to the revenue procedure is considered timely filed for purposes of

PLR-115012-14 2

§ 1.442-1(b)(1) only if it is filed on or before the time (including extensions) for filing the
return for the short period required to effect the change.

Requests for extensions of time for regulatory elections that do not meet the
requirements of § 301.9100-2 (automatic extensions), such as in the instant case, must
be made under the rules of § 301.9100-3. See § 301.9100-3(a). Requests for relief
subject to § 301.9100-3 is granted when the taxpayer provides evidence establishing
that the taxpayer acted reasonably and in good faith, and that the granting of relief will
not prejudice the interests of the government. See id.

Based on the information submitted and the representations made, we conclude that
taxpayer has acted reasonably and in good faith, and that the granting of relief will not
prejudice the interests of the government. The requirements of § 301.9100-3 have
been satisfied in this case. Accordingly, taxpayer’s Form 1128 requesting a change to a
taxable year ending June 30, effective for the short taxable year beginning January 1,
Year, and ending June 30, Year, is considered timely filed.

Because a change in accounting 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 are forwarding a copy of this letter ruling and taxpayer’s Form 1128
to the Director, Service Center A, with instructions that the Form 1128 be considered
timely filed and processed in accordance with established procedures under Rev. Proc.
2006-45. Any further communication regarding this matter should be directed to
Service Center A.

The ruling contained in this letter is based on information and representations furnished
by taxpayer. This office has not verified any of the taxpayer’s representations or the
material submitted in support of the request for rulings. As part of an examination
process, the Service may verify the information, representations and other data
submitted.

This letter ruling addresses the grant of relief under § 301.9100-3 only. We express no
opinion on the tax treatment of the instant transaction under any provision of the Internal
Revenue Code or the regulations that may be applicable. Specifically, we express no
opinion as to whether taxpayer may, under the Code and applicable regulations, change
to the taxable year requested in the Form 1128, or whether the change may be effected
under Rev. Proc. 2006-45.

This ruling is directed only to the taxpayer that requested 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 showing the deletions proposed to be made when disclosed under § 6110.

PLR-115012-14 3

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to taxpayer’s authorized representatives.

                                   Sincerely,



                                   William A. Jackson
                                   Chief, Branch 5
                                   Office of Associate Chief Counsel
                                   (Income Tax & Accounting)

Enclosure:
Copy for § 6110 purposes

cc: