Late Form 1128 treated as timely filed

Plain-English summary

A taxpayer filed Form 1128 after the deadline for requesting an accounting-period change under Revenue Procedure 2006-46. It sought discretionary relief under Treasury Regulation section 301.9100-3 shortly after missing the deadline. Based on the submitted facts and representations, the IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. It treated the late Form 1128 as timely filed and forwarded the application to the relevant service center. The ruling only grants filing relief and does not decide whether the requested tax-year change is otherwise permissible.

Ruling snapshot

• Question: May the taxpayer's late Form 1128 requesting an accounting-period change be treated as timely filed?
• Outcome: approved
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1, 301.9100-3; Rev. Proc. 2006-46

Full text (IRS public release)

Internal Revenue Service                              Department of the Treasury
                                                      Washington, DC 20224

Number: 202016014                                     Third Party Communication: None
Release Date: 4/17/2020                               Date of Communication: Not Applicable
Index Number: 9100.00-00
                                                      Person To Contact:
--------------------------                            ----------------------, ID No. -------------
-----------------------------                         Telephone Number:
---------------------------------------               --------------------
----------------------------------------------        Refer Reply To:
---------------------------------                     CC:ITA:B05
                                                      PLR-121339-19
                                                      Date:
                                                      January 10, 2020

Taxpayer: -------------------------------------
EIN:      ----------------
Year:     -------

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

This ruling is in reference to Taxpayer’s 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 Procedures and Administration Regulations. Taxpayer filed a
late Form 1128 to change its accounting period, for federal income tax purposes, from
a taxable year ending ------------------, to a taxable year ending -------------, effective --------
---------------------.

Rev. Proc. 2006-46, 2006-2 C.B. 859, provides the exclusive procedure for a
partnership, S corporation, electing S corporation, personal service corporation, or
trust to obtain automatic approval to change its annual accounting period under
§ 442 of the Internal Revenue Code and § 1.442-1(b) of the Income Tax Regulations.
A taxpayer 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. 2006-46
provides that a Form 1128 filed pursuant to the revenue procedure will be considered
timely filed for purposes of § 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 such
change.

The information furnished indicates that Taxpayer did not file its Form 1128 by the due
date of the return for the short period required to effect such change and did not request
an extension of time to file its return. However, Taxpayer filed its Form 1128 under
§ 301.9100-3 soon thereafter.

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),

PLR-121339-19                                 2

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 Form 1128 requesting to change to a taxable year ending -------------, effective -
---------------------, is considered timely filed.

Because a change in period under Rev. Proc. 2006-46 is under the jurisdiction of the
Director, Internal Revenue Service Center, where Taxpayer’s returns are filed, we have
forwarded the application to the Director, Ogden, Utah Service Center. Any further
communication regarding this matter should be directed to the Service Center.

This ruling is based upon facts and representations submitted by 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 an 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 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. 2006-46.

A copy of this letter must be attached to any income tax return to which it is relevant.
Alternatively, Taxpayer filing its returns electronically may satisfy this requirement by
attaching a statement to its 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-121339-19                               3

The user fee submitted for the change in accounting period will be refunded in a
separate correspondence.

                                        Sincerely,

                                        Erika Reigle
                                        Assistant to Chief, Branch 5
                                        (Income Tax & Accounting)
                                        Office of Chief Counsel