Late Form 1128 is treated as timely filed

Plain-English summary

A C corporation that headed a consolidated group decided to change its tax year from June 30 to November 30 to align with its revenue cycle. It did not consult its tax advisers when making the decision and was unaware that Form 1128 had to be filed by the applicable deadline. The IRS concluded that the corporation acted reasonably and in good faith and that relief would not prejudice the government. It therefore treated the late Form 1128 as timely filed. The ruling grants deadline relief only and does not decide whether the corporation is otherwise eligible to adopt the requested tax year.

Ruling snapshot

• Question: May the consolidated group parent's late Form 1128 be treated as timely filed?
• Outcome: Yes, for purposes of section 301.9100-3 relief.
• Key authorities: IRC § 442; Treas. Reg. §§ 301.9100-1 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                   Department of the Treasury
                                                           Washington, DC 20224

Number: 201606008                                          Third Party Communication: None
Release Date: 2/5/2016                                     Date of Communication: Not Applicable
Index Number: 9100.09-00
                                                           Person To Contact:
------------------------------                             -------------------, ID No. -----------------
---------------------------------------                    Telephone Number:
------------------------------------------------           ---------------------
------------------------------                             Refer Reply To:
                                                           CC:ITA:B04
                                                           PLR-121245-15
                                                           Date:
                                                           October 26, 2015




Legend:

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

Year = ------

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

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

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


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

This letter ruling refers to your request that the Internal Revenue Service grant an
extension of time, under the authority in § 301.9100-3 of the Regulations on Procedure
and Administration, to file Form 1128, Application to Adopt, Change, or Retain a Tax
Year. Taxpayer requests to change its accounting period, for federal income tax
purposes, from a taxable year ending June 30 to a taxable year ending November 30,
effective November 30, Year, and requests that Form 1128 be considered timely filed
under § 301.9100-3.

Taxpayer, a C corporation, is the parent company of a consolidated group, and is
requesting relief on behalf of the group. Taxpayer uses an overall accrual method of
accounting for federal income tax purposes.
PLR-121245-15                                 2

Although Taxpayer has maintained an accounting period ending June 30, it decided to
change to a November 30 year-end in order to align with its revenue cycle. Taxpayer
did not seek the advice of its tax advisors when it decided upon the change in
accounting period, and was unaware of the requirement to file Form 1128 on or before
the filing deadline of Date 3. Taxpayer informed its tax advisors on Date 1 that it
changed its accounting period for financial reporting purposes beginning with the period
ending Date 2, and also wanted to change its accounting period for federal income tax
purposes beginning with the period ending Date 2. Thus, Taxpayer has requested an
extension of time to file its Form 1128 under § 301.9100-3.

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. Requests 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 interests 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 interests of the government. Accordingly, Taxpayer has
satisfied the requirements of the regulations for the granting of relief, and Taxpayer’s
late filed Form 1128 requesting to change to November 30, effective Date 2, is
considered timely filed. However, the granting of an extension of time is not a
determination that Taxpayer is otherwise eligible to make the election. See § 301.9100-
1(a).

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
sections of the Code or 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 Taxpayer is permitted
under the Code and applicable regulations to change to the tax year requested in the
Form 1128.

This ruling is based upon facts and representations that Taxpayer submitted,
accompanied by a penalty of perjury statement. 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 is directed only to the taxpayers 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 ruling showing the deletions proposed to be made when it is disclosed under
§ 6110.
PLR-121245-15                               3


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

                                         Sincerely,



                                         J. Peter Baumgarten
                                         Assistant to the Branch Chief, Branch 4
                                         Office of Associate Chief Counsel
                                         (Income Tax & Accounting)

Enclosure