IRS grants extra time to file the duplicate copy of a Form 3115 accounting-method change

Plain-English summary

To change an accounting method under the IRS automatic-consent procedures, a taxpayer must file Form 3115 twice: the original with its tax return, and a duplicate copy with the IRS office in Ogden, Utah, by the time the return is filed. A partnership (with several disregarded affiliates) did a cost segregation study and timely attached the original Form 3115 to its return to change its depreciation method, but inadvertently failed to mail the required Ogden duplicate copy. It sought "9100 relief," a discretionary extension to make the late filing under Treasury Regulation § 301.9100-3. The IRS found the taxpayer acted reasonably and in good faith and that relief would not prejudice the government, and granted 60 days to file the Ogden copy. The ruling does not decide whether the underlying accounting-method changes are actually proper.

Ruling snapshot

• Question: May the partnership get an extension of time to file the duplicate (Ogden) copy of its Form 3115 accounting-method change?
• Outcome: Approved (60-day extension to file the Ogden copy)
• Key authorities: IRC § 446(e); Treas. Reg. §§ 1.446-1(e), 301.9100-1 through 301.9100-3; Rev. Proc. 2015-13; Rev. Proc. 2019-43

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202219014 Third Party Communication: None
Release Date: 5/13/2022 Date of Communication: Not Applicable
Index Numbers: 9100.00-00, 9100.10-00,
9100.10-01 Person To Contact:
------------------, ID No. -----------------
----------------- Telephone Number/Fax Number:
------------- --------------------
------------------------------------------ Refer Reply To:
---------------------------- CC:ITA:B7
------------- PLR-122603-21
------------------------ Date:
February 09, 2022

In re: Request for Extension of Time to File a Duplicate Copy of
Form 3115, Application for Change in Accounting Method

                                                LEGEND

Partnership = -------------------------------------------------------------------
DE1 = --------------------------------------------------
DE2 = ------------------------------------------------------
DE3 = --------------------------------------------------------
DE4 = ------------------------------------------------
DE5 = ---------------------------------------------------
DE6 = --------------------------------------------------------
Year = -----------------------------------------------------------------------------------------

                       -------

X = -----------------------------------------
Date1 = ---------------------------
Date2 = -------
Date3 = --------------------
Date4 = ---------------------------
Firm1 = ----------------------
Firm2 = --------------------------------

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

     This ruling letter responds to a letter dated November 1, 2021, and subsequent

PLR-122603-21 2

correspondence, submitted by your authorized representative on behalf of Partnership
and its wholly owned affiliates, DE1, DE2, DE3, DE4, DE5, and DE6 (collectively,
Affiliates). In that letter, Partnership requests the consent of the Commissioner of
Internal Revenue (Commissioner) to grant an extension of time pursuant to §§
301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to file a
duplicate copy of a Form 3115, Application for Change in Accounting Method, (Ogden
copy) with the Ogden, UT office of the Internal Revenue Service (Service) to change its
methods of accounting for depreciation, effective for the Taxable Year, as required
under section 6.03(1)(a)(i)(B) of Rev. Proc. 2015-13, 2015-5 I.R.B. 419, 432. This letter
ruling is being issued electronically in accordance with section 7.02(5) of Rev. Proc.
2021-1, 2021-1 I.R.B. 1, 35. A paper copy will not be mailed.

                                     FACTS

  Partnership represents that the facts are as follows:
  Partnership, a limited partnership, files a Form 1065, U.S. Return of Partnership

Income on a calendar year basis. Partnership’s overall method of accounting is the
accrual method. Partnership treats the Affiliates as disregarded entities for federal
income tax purposes. Hereinafter, Partnership and Affiliates are collectively referred to
as Taxpayer. The due date of Partnership’s Form 1065 (including extensions) for the
Taxable Year was Date1.
Each of the Affiliates holds and operates a separate property (collectively,
Properties). X manages Partnership, including assisting Partnership with its annual
income tax filings. X engaged Firm1 to prepare Partnership’s federal and state income
tax returns for the Tax Year. In Date2, X engaged Firm2 to perform a cost segregation
study for the Properties. X also engaged Firm2 to prepare a Form 3115 to obtain
automatic consent to change the Affiliates’ methods of accounting for depreciation,
effective for the Taxable Year. The change in methods of accounting were described in
section 6.01 of Rev. Proc. 2019-43, 2019-48 I.R.B. 1107, 1115 (designated automatic
change number (DCN) 7). Partnership’s Form 1065 for the Taxable Year (year of
change) implemented the change in methods of accounting for depreciation, as
described in the Form 3115.
On Date2, Firm2 sent X a signed original and a fileable copy of the completed
Form 3115 with written instructions indicating that the Ogden copy must be mailed as
soon as possible prior to the extended due date of the return. On Date2, X provided
Firm1 with the original Form 3115. On Date1, Firm1 timely e-filed Partnership’s Form
1065 for the Taxable Year and attached the original Form 3115. The filing was
accepted on Date1. X intended to timely file the Ogden copy. As a result of intervening
circumstances, X inadvertently failed to file the Ogden copy, on or before Date1. On
Date4, X discovered the failure to timely file the Ogden copy and contacted Firm1.
PLR-122603-21 3

                             RULING REQUESTED

  Accordingly, Partnership, on behalf of the Affiliates, requests an extension of time

pursuant to §§ 301.9100-1 and 301.9100-3 to file the Ogden copy of the original Form
3115, Application for Change in Accounting Method, as required under section
6.03(a)(i)(B) of Rev. Proc. 2015-13, to change their methods of accounting for
depreciation, effective for the Tax Year.

                             LAW AND ANALYSIS

   Rev. Proc. 2015-13 provides the procedures by which a taxpayer may obtain

automatic consent to change certain accounting methods. Section 9 of Rev. Proc.
2015-13 provides that consent of the Commissioner to change its accounting method
under § 446(e) and § 1.446-1(e) of the Income Tax Regulations is granted only if the
taxpayer complies with all the applicable provisions of the revenue procedure and
implements the change in method on its federal income tax return for the requested
year of change to which the original Form 3115 is attached pursuant to section 6.03.

   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 Form 3115 must be attached to the taxpayer’s timely filed
(including any extension) original federal income tax return for the year of change, and a
copy (with signature) of the Form 3115 must be filed with the Ogden, UT office of the
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(b) defines a regulatory election as an election whose due

date 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(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 301.9100-3(a) provides that requests for relief subject to § 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 the
granting of relief will not prejudice the interests of the Government.
PLR-122603-21 4

Section 301.9100-3(c)(2) imposes special rules for accounting method regulatory
elections. This section provides, in relevant part, that the interests of the Government
are deemed to be prejudiced except in unusual and compelling circumstances when the
accounting method regulatory election for which relief is requested is subject to the
procedure described in § 1.446-1(e)(3)(i) or the relief requires an adjustment under
§ 481(a) (or would require an adjustment under § 481(a) if the taxpayer changed to the
accounting method for which relief is requested in a taxable year subsequent to the
taxable year the election should have been made).

                                 CONCLUSION

    Based solely on the facts and representations submitted, we conclude that the

requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied in Taxpayer’s case.
Accordingly, Partnership is granted 60 calendar days from the date of this letter to file
the Ogden copy of the Form 3115 for the Taxable Year. Partnership must attach a copy
of this letter ruling to the Ogden copy. A copy of this letter ruling is enclosed for that
purpose. Provided Partnership meets these filing requirements, we will consider the
Ogden copy for the Taxable Year to be timely filed under the procedures of Rev. Proc.
2015-13.
Except as expressly set forth above, we express no opinion concerning the
federal tax consequences of the facts described above under any other provision of the
Code or regulations. Specifically, no opinion is expressed or implied, concerning
whether: (1) the accounting method changes that Taxpayer has made are eligible to be
made under section 6.01 of Rev. Proc. 2019-43 and Rev. Proc. 2015-13; (2) Taxpayer
otherwise meets the requirements of Rev. Proc. 2015-13 to make its accounting method
changes using the procedures of Rev. Proc. 2015-13; or (3) Taxpayer’s classification,
depreciation method, convention, or recovery period of the assets subject to Form 3115
are correct.

  This letter ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)

provides that this ruling may not be used or cited as precedent.
PLR-122603-21 5

    In accordance with the Power of Attorney on file with this office, we are sending a

copy of this letter to Taxpayer’s authorized representative. We also are sending a copy
of this letter ruling to the appropriate IRS operating division official.

                                         Sincerely,

                                         ELIZABETH R. BINDER
                                         General Attorney (Tax), Branch 7
                                         Office of Associate Chief Counsel
                                         (Income Tax & Accounting)

Enclosures (2):
copy of this letter
copy for section 6110 purpose

cc:

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