Late Form 1128 for January year-end change treated as timely

Plain-English summary

A taxpayer and its controlled foreign corporations filed Form 1128 late to change their federal tax year from a December 31 year-end to a January 31 year-end. The automatic procedure in Revenue Procedure 2006-45 required filing by the short-period return deadline, which they missed. They requested discretionary relief soon afterward. The IRS found that they acted reasonably and in good faith and that relief would not prejudice the government, so it treated the Form 1128 as timely filed. The ruling addressed only the late-filing relief and did not decide whether the requested tax-year change was otherwise permitted or qualified under the revenue procedure.

Ruling snapshot

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

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201530007 Third Party Communication: None
Release Date: 7/24/2015 Date of Communication: Not Applicable
Index Number: 9100.00-00
Person To Contact:
----------------------------------- ----------------------, ID No. -----------
----------------------------- Telephone Number:
------------------------------- --------------------
-------------------------------------- Refer Reply To:
-------------------------------------------------- CC:ITA:B05
PLR-109676-15
Date:
April 13, 2015

Taxpayer: -------------------------------

           -------------------------

          ---------------------------------

Year: ------

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

This ruling is in reference to the above-named taxpayers’ and the controlled foreign
corporations (CFCs) (Taxpayer) request that its Form 1128, “Application To Adopt,
Change, or Retain a Tax Year,” be considered timely filed under the authority in
§ 301.9100-3 of the Income Tax Regulations on Procedures and Administration.
Taxpayer filed a late Form 1128 to change its accounting period, for federal income tax
purposes, from a taxable year ending December 31, to a taxable year ending January
31, effective January 31, Year.

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 of the Internal Revenue Service 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. However,
the taxpayer requested an extension of time to file its Form 1128 under § 301.9100-3
soon thereafter.
PLR-109676-15 2

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.

Based on the facts and 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 interest of the government. Accordingly, Taxpayer has
satisfied the requirements of the regulations for the granting of relief, and Taxpayer’s
late filed request to change to January 31, effective January 31, Year, 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, ------------------------------------. 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 the 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 ruling must be attached to taxpayer’s income tax return to which it
is relevant. Alternatively, taxpayers filing their returns electronically may satisfy this
requirement by attaching a statement to their 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.
PLR-109676-15 3

In accordance with the Power of Attorney on file with this office, we are sending a copy
of this letter ruling to your authorized representative.

                                     Sincerely yours,



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

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