Company gets 60 days to refile accounting-method-change forms filed one hour late

Plain-English summary

A company decided to make three automatic accounting method changes for a tax year, which requires attaching an original Form 3115 for each change to a timely filed return (and filing a copy separately). Its tax firm filed the separate copies on time, but because of an unusual series of events could not e-file the return with the original Forms 3115 until one hour after the extended due date, making those forms untimely. The company asked for relief under Treasury Regulation section 301.9100-3, which lets the IRS extend the deadline for regulatory elections (including a change of accounting method) when the taxpayer acted reasonably and in good faith and the government is not prejudiced. Finding those standards met, the IRS granted 60 days from the ruling to refile the original Forms 3115 with an amended return. The ruling addresses only the timeliness of the forms, not whether the method changes qualify, and it does not excuse the late-filed return itself or any resulting penalties and interest. It matters because it shows the IRS will rescue an accounting-method-change filing that missed the deadline by as little as an hour.

Ruling snapshot

• Question: Will the IRS extend the deadline to file the original Forms 3115 for three accounting method changes that were filed one hour late?
• Outcome: Approved (60 days from the ruling to refile the Forms 3115 with an amended return)
• Key authorities: IRC § 446(e); Treas. Reg. § 1.446-1(e); Treas. Reg. §§ 301.9100-1 through 301.9100-3; Rev. Proc. 2015-13

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202147005 Third Party Communication: None
Release Date: 11/26/2021 Date of Communication: Not Applicable
Index Number: 9100.00-00
Person To Contact:
----------------------------------- ---------------, ID No. -----------------
----------------------------- Telephone Number:
--------------------------- ---------------------
Refer Reply To:
Attn: -------------------------- CC:ITA:B2
-------------------------------------------------------- PLR-105059-21
Date:
August 30, 2021

LEGEND:

Taxpayer = -------------------------------------------------------------
Taxable Year = ---------------------------------------------------------
Firm A = ------------------------
Firm B = ----------------
Date 1 = ----------------------
Date 2 = -----------------------
Date 3 = -----------------------
Change 1 = ----------------------------------------------------------------------------------------------------
Change 2 = ----------------------------------------------------------------------------------------------------
Change 3 = -------------------------------------------------------------------------------------
Services = -----------------------------------------------------------------------

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

This ruling responds to a letter submitted Date 1, requesting an extension of time under
§§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to
change accounting methods under § 446(e) of the Internal Revenue Code, § 1.446-1(e)
of the Income Tax Regulations, and the automatic consent procedures of Rev. Proc.
2015-13, 2015-5 I.R.B. 419, as clarified and modified by Rev. Proc. 2015-33, 2015-24
I.R.B. 1067, and as modified by Rev. Proc. 2021-26, 2021-22 I.R.B. 1163, by Rev. Proc.
2017-59, 2017-48 I.R.B. 543, and by section 17.02(b) and (c) of Rev. Proc. 2016-1,
2016-1 I.R.B. 12011-4 I.R.B. 330, 346, for the Taxable Year. This letter ruling is being
PLR-105059-21 2

issued electronically in accordance with section 7.02(5) of Rev. Proc. 2021-1, 2021-1
IRB 1, 35.

                      FACTS AND REPRESENTATIONS

Taxpayer represents the following:

Taxpayer uses an overall accrual accounting method and a calendar taxable year.
Taxpayer provides Services. Taxpayer was the common parent of an affiliated group of
domestic corporations that filed a consolidated corporate federal income tax return for
the Taxable Year.

For the Taxable Year, Taxpayer decided to make three automatic accounting method
changes, Change 1, Change 2, and Change 3, pursuant to the administrative rules of
Rev. Proc. 2015-13 and the List of Automatic Changes in Rev. Proc. 2019-43, 2019-48
I.R.B. 1107.

Taxpayer hired Firm A to provide tax compliance services, including preparing and filing
a Form 3115 and required copy for Change 1, Change 2, and Change 3, for the Taxable
Year. Firm A timely filed the required copy of the Form 3115 with the appropriate office
of the Internal Revenue Service prior to the extended due date of the relevant tax
return, Date 2, for Change 1, Change 2, and Change 3. See section 6.03(1)(a)(i)(B) of
Rev. Proc. 2015-13.

Due to an unusual series of events, Firm A was not able to e-file Taxpayer’s Forms
3115 for Change 1, Change 2, and Change 3, for the Taxable Year with its federal
income tax return until one hour after the extended due date of Date 2. However,
Taxpayer filed its federal income tax return for the Taxable Year reflecting Change 1,
Change 2, and Change 3, and the original Form 3115 for each of the three accounting
method changes were attached.

Firm A notified Taxpayer promptly on Date 3 that Taxpayer’s federal income tax return
was filed shortly after the extended due date of Date 2, and therefore, the Forms 3115
attached to the return were filed untimely. Taxpayer contacted Firm B for its assistance
in requesting an extension of time to file the original of Taxpayer’s Forms 3115.

                                     LAW

Rev. Proc. 2015-13 provides the procedures by which a taxpayer may obtain automatic
consent to change certain accounting methods. A taxpayer complying with all the
applicable provisions of this revenue procedure has obtained the consent of the
Commissioner to change its method of accounting under § 446(e) and the regulations.
PLR-105059-21 3

Section 6.03(1)(a)(i) of Rev. Proc. 2015-13 provides that a taxpayer changing an
accounting method pursuant to Rev. Proc. 2015-13 must complete and file a Form 3115
in duplicate. The original must be attached to the taxpayer’s timely filed (including any
extensions) original federal income tax return for the year of change, and a copy (with
signature) of the Form 3115 must be filed with the appropriate office of the Internal
Revenue Service 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.

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 301.9100-1(c) provides that 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 certain regulatory elections. Section 301.9100-1(b) defines a “regulatory
election” as an election with a due date that is prescribed by a regulation published in
the Federal Register, or a revenue ruling, revenue procedure, notice or announcement
published in the Internal Revenue Bulletin. Section 301.9100-1(b) further provides that
an election includes a request to adopt, change, or retain an accounting method.

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.

Section 301.9100-3(c)(1) provides that the interests of the Government are prejudiced if
granting relief would result in the taxpayer having a lower tax liability in the aggregate
for all taxable years affected by the election than the taxpayer would have had if the
election had been timely made. The interests of the Government are ordinarily
prejudiced if the taxable year in which the regulatory election should have been made,
or any taxable years that would have been affected by the election had it been timely
made, are closed by the period of limitations on assessment.

                                 CONCLUSION

Based upon an analysis of the facts and representations provided, Taxpayer acted
reasonably and in good faith, and granting relief will not prejudice the interests of the
Government. Therefore, the requirements of §§ 301.9100-1 and 301.9100-3 have been
met.

Taxpayer is granted an extension of 60 days from the date of this ruling to file the
required original Form 3115 for Change 1, Change 2, and Change 3 described above
PLR-105059-21 4

for the Taxable Year with an amended federal income tax return for that year. Please
attach a copy of this letter ruling to the amended return.

The ruling contained in this letter is based on information and representations submitted
by 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.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any fact or item discussed or referenced in this letter. Specifically,
we have no opinion, either expressed or implied, concerning (1) whether the accounting
method changes Taxpayer has attempted to make are eligible to be made under the
automatic consent procedures of Rev. Proc. 2015-13 and Rev. Proc. 2019-34; and (2)
whether Taxpayer otherwise meets the requirements of Rev. Proc. 2015-13 to make the
accounting method changes using Rev. Proc. 2015-13. Further, no opinion is
expressed or implied regarding the correctness of Taxpayer’s accounting methods.
Lastly, we emphasize that this letter ruling does not grant any extension of time for the
filing of Taxpayer’s federal income tax return for the Taxable Year. Taxpayer is subject
to any appropriate penalty and interest resulting from its failure to have its federal tax
return filed timely.

This ruling is directed only to Taxpayer. Section 6110(k)(3) provides that it may not be
used or cited as precedent.

In accordance with the power of attorney, a copy of this letter ruling is being sent
electronically to each of Taxpayer’s authorized representatives.

                                                Sincerely yours,



                                                ___________________________
                                                Bridget Tombul
                                                Chief, Branch 2
                                                Office of Associate Chief Counsel
                                                (Income Tax & Accounting)

Enclosure:

Copy for § 6110 purposes

cc: