Corporation receives 60 days to file omitted Form 3115

Plain-English summary

A corporate group intended to make automatic accounting-method changes for repairs, units of property, and materials and supplies. Its tax preparer completed Form 3115 and timely sent the duplicate copy to the IRS, but accidentally left the original out of the corporation’s electronically filed return. The preparer discovered the omission during an internal review and advised the corporation to request relief. The IRS found that the standards for regulatory-election relief were met and granted 60 days to file the signed original Form 3115. It expressed no opinion on whether the corporation otherwise qualified for the method changes or on any section 481(a) adjustment.

Ruling snapshot

• Question: May the corporation file a Form 3115 that its preparer inadvertently omitted from a timely electronic return?
• Outcome: Approved.
• Key authorities: IRC § 481(a); Treas. Reg. §§ 1.162-3, 1.162-4, 1.263(a)-3, 301.9100-1 through 301.9100-3; Rev. Procs. 2011-14, 2014-16.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201621006 Third Party Communication: None
Release Date: 5/20/2016 Date of Communication: Not Applicable
Index Number: 9100.00-00
Person To Contact:
----------------------------- -----------------, ID No. --------------
--------------------------- Telephone Number:
----------------------------- ----------------------
------------------------------------------ Refer Reply To:
CC:ITA:B03
PLR-128560-15
Date:
February 11, 2016

              TY: -------

Legend

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

Subsidiaries = ----------------------------------------------------------

Tax Preparer = ------------------------

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

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

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

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

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

This letter responds to your letter dated Date 1, submitted by Taxpayer requesting an
extension of time under § 301.9100-3 of the Procedure and Administration Regulations
to file Form 3115, Application for Change of Accounting Method.

                                               FACTS

Taxpayer is the parent of a consolidated group of corporations, including Subsidiaries,
that files a consolidated federal income tax return.

Taxpayer determined that in accordance with Rev. Proc. 2014-16, it was required to file
a Form 3115 relating to the Subsidiaries’ accounting for repairs and maintenance
PLR-128560-15 2

expenditures under Treas. Reg. § 1.162-4, units of property under § 1.263(a)-3, and
incidental/non-incidental materials and supplies for the taxable year ended Date 2.

Taxpayer engaged Tax Preparer to assist the company in making the automatic method
changes for the period ending Date 2, in accordance with the procedures in Rev. Proc.
2011-14 and Rev. Proc. 2014-16. Tax Preparer prepared the Form 3115 and provided
the Form 3115 to Taxpayer so that the Form 3115 could be attached to Taxpayer’s
timely filed Date 2 Form 1120. On Date 3, Tax Preparer, on behalf of Taxpayer, filed a
copy of the Form 3115 with the IRS in Ogden, UT, as required by Rev. Proc. 2014-16.

Taxpayer timely filed its Date 2 Form 1120 electronically on Date 4. Taxpayer intended
to attach the original Form 3115 to its electronically filed return. Tax Preparer was
responsible for scanning the original Form 3115 into the electronic return. In preparing
the Date 2 return for electronic filing, Tax Preparer inadvertently excluded the Form
3115 with the electronic return that was filed on behalf of Taxpayer.

Tax Preparer discovered that the Form 3115 had not been attached to the electronically
filed return after having an internal update meeting regarding the Date 2 tax return and
then going through the copy of the electronically filed return package as part of its filing
and tax return documentation process. As a result, Tax Preparer advised Taxpayer to
request an extension of time under Treas. Reg. § 301.9100 to file the Form 3115 with
Taxpayer’s Date 2 return.

                               RULING REQUESTED

Accordingly, Taxpayer requests that the Service grant an extension of time to file the
signed original Form 3115 with its timely filed Date 2 federal income tax return so that
the requests for its Subsidiaries to change their methods of accounting for repair and
maintenance expenditures under Treas. Reg. § 1.162-4, units of property under Treas.
Reg. § 1.263(a)-3, and incidental/non-incidental materials and supplies will be treated
as being made on a timely basis and will be granted to become effective for the taxable
year ended Date 2.

                                LAW AND ANALYSIS

Rev. Proc. 2011-14, 2011-1 C.B. 330 (as amplified, clarified and modified by Rev. Proc.
2009-39, 2009-2 C.B. 371) provides the procedures by which a taxpayer may obtain
automatic consent to change certain methods of accounting described in the Appendix
thereto.

Section 6.02(3) of Rev. Proc. 2011-14 requires a taxpayer making a change under the
automatic consent procedures to complete and file an application in duplicate. The
original must be attached to the taxpayer's timely filed (including extensions) original
federal income tax return for the year of change, and a copy (with signature) of the
PLR-128560-15 3

Form 3115 must be filed with the IRS National Office no earlier than the first day of the
year of change and no later than when the original is filed with the federal income tax
return for the year of change.

Section 3.02 of Rev. Proc. 2014-16 modifies Rev. Proc. 2011-14 by providing the
procedures by which a taxpayer may obtain automatic consent to change certain
methods of accounting including repair and maintenance expenditures under Treas.
Reg. § 1.162-4, units of property under Treas. Reg. § 1.263(a)-3, and incidental/non-
incidental materials and supplies under Treas. Reg. § 1.162-3. Rev. Proc. 2014-16 also
modifies Rev. Proc. 2011-14 to require that the duplicate copy of Form 3115 for these
changes be filed with the IRS in Ogden, UT.

Under § 301.9100-1, 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 a regulatory
election.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will
use to determine whether to grant an extension of time to make an election. 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.

Section 301.9100-3(a) provides that requests for relief under § 301.9100-3 will be
granted when the taxpayer provides evidence to establish to the satisfaction of the
Commissioner that the taxpayer acted reasonably and in good faith, and that granting
relief will not prejudice the interests of the government.

                                  CONCLUSIONS

Based solely on the facts and the representations submitted, we conclude that the
requirements of §§ 301.9100-1 and 301.9100-3 have been met. Accordingly, Taxpayer
is granted 60 calendar days from the date of this letter to file the original of the Form
3115 (with signature) in accordance with Rev. Proc. 2011-14 and Rev. Proc. 2014-16.

Except as specifically ruled upon above, no opinion is expressed or implied concerning
the federal income tax consequences of the facts described above. Specifically, no
opinion is expressed or implied concerning (i) whether Taxpayer is qualified to file the
Form 3115 for the changes in method of accounting under Rev. Proc. 2014-16; or (ii)
the calculation of any adjustment required by § 481(a).

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.
PLR-128560-15 4

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the request for rulings, it is subject to verification on examination.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

                                   Sincerely,



                                   Christopher F. Kane
                                   Branch Chief, Branch 3
                                   (Income Tax & Accounting)