Partnership granted extra time to file the duplicate copy of its Form 3115 for a depreciation accounting-method change

Plain-English summary

To change an accounting method under the automatic-consent procedures, a taxpayer must file Form 3115 twice: attach the original to the timely filed tax return, and separately file a duplicate copy with a designated IRS office by the return's filing date. Here a partnership (an LLC filing Form 1065) changed its method of accounting for depreciation of certain property under § 168, attached the signed original Form 3115 to its timely filed return, and reported the resulting § 481(a) adjustment, but its outside consulting firm inadvertently failed to file the required duplicate copy in time. The partnership asked the IRS for relief under Treas. Reg. § 301.9100-3. The IRS granted a 60-day extension to file the duplicate Form 3115. Note that for accounting-method elections requiring a § 481(a) adjustment, the government's interests are presumed prejudiced except in unusual and compelling circumstances; the IRS found the standard met here. The IRS expressed no opinion on whether the method change actually qualifies for the automatic procedures or is otherwise permissible.

Ruling snapshot

• Question: May a taxpayer that filed the original Form 3115 but missed filing the duplicate copy get an extension to file the duplicate?
• Outcome: approved (60-day extension to file the duplicate Form 3115)
• Key authorities: Treas. Reg. §§ 301.9100-1 and 301.9100-3 (including § 301.9100-3(c)(2)); Rev. Proc. 2015-13; IRC §§ 168, 446(e), 481(a)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202221007 Third Party Communication: None
Release Date: 5/27/2022 Date of Communication: Not Applicable
Index Number: 9100.04-00
Person To Contact:
----------------------------------------------- -----------------------, ID No. -----------------
---------------------------------------------- Telephone Number:
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----------------------------- Refer Reply To:
CC:ITA:B07
PLR-124394-21
Date:
March 2, 2022

Re: Request for Extension of Time to File the Duplicate Form 3115

Legend

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

Year1 = ------------------------------------------------------------------
--------------------------
A = -------------------------------------------------
Date1 = ---------------------
Date2 = --------------------------
Date3 = ---------------------------
Date4 = ---------------------------

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

  This ruling letter responds to a letter dated November 12, 2021, and subsequent

correspondence submitted by Taxpayer, requesting an extension of time pursuant to
§§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to file
the duplicate copy of the Form 3115, Application for Change in Accounting Method.
Taxpayer should have filed the duplicate copy of the Form 3115 pursuant to section
6.03(1)(a)(i)(B) of Rev. Proc. 2015-13, 2015-5 I.R.B. 419, 432, beginning for the taxable
year beginning Date1, and ended Date2. This letter ruling is being issued electronically
as permissible under section 7.02(5) of Rev. Proc. 2021-1, 2021-1 I.R.B. 1, 33.
PLR-124394-21 2

                                     FACTS

   Taxpayer represents that the facts are as follows:

   Taxpayer, a limited liability company, files a Form 1065, U.S. Return of

Partnership Income, on a calendar-year basis. Taxpayer’s overall method of accounting
is an accrual method.

  Beginning for the taxable year beginning Date1, Taxpayer wanted to change its

method of accounting for depreciation of certain depreciable tangible property under
§ 168 of the Internal Revenue Code. Taxpayer believes that this change in method of
accounting could be implemented under the automatic change procedures of Rev. Proc.
2015-13. Thus, in accord with the automatic change procedures of Rev. Proc. 2015-13,
Taxpayer should have completed the original, signed Form 3115, reflecting the desired
accounting method change, and attached this original to Taxpayer’s timely-filed federal
income tax return for the taxable year beginning Date1.

   Further, in accord with the automatic change procedures of Rev. Proc. 2015-13,

a copy of the original Form 3115, with an original signature or a photocopy of the
original signature, should have been timely filed with the appropriate office of the
Internal Revenue Service (IRS). Lastly, Taxpayer's federal income tax return for the
taxable year beginning Date1, should have reflected this accounting method change
made by Taxpayer.

   Taxpayer, with the assistance of A, an outside tax consulting firm, timely filed its

federal income tax return for Year1, along with the signed original Form 3115 requesting
to change its method of accounting for depreciation for certain assets under the
automatic change procedures of Rev. Proc. 2015-13 for the change described in section
6.01 of Rev. Proc. 2019-43, 2019-48 I.R.B. 1107, 1115 (designated automatic
accounting method change number 7). The accounting method change and
accompanying adjustment under § 481(a) were reflected on Taxpayer’s federal income
tax return for Year1. However, Taxpayer inadvertently failed to file the duplicate copy of
the Form 3115 with the appropriate IRS office, as required by section 6.03(1)(a)(i)(B) of
Rev. Proc. 2015-13.

   On Date3, A electronically filed Taxpayer’s federal income tax return. After the

close of normal business hours on Date3, A discovered that the duplicate copy of the
Form 3115 had not been filed due to A’s error. A attempted to contact Taxpayer for the
necessary signature to file the duplicate copy of the Form 3115 on Date3. However, A
was unable to obtain Taxpayer’s signature and therefore was not able to file the
duplicate copy of the Form 3115 before the extended due date of the return.

  Subsequently, on Date4, A discussed the missed filing with Taxpayer. A then

submitted this request for an extension of time to file the duplicate copy of Taxpayer's
Form 3115.
PLR-124394-21 3

                             RULING REQUESTED

   Taxpayer is requesting an extension of time under §§ 301.9100-1 and

301.9100-3 to file the duplicate copy of the Form 3115 for the taxable year ended
Date2.

                              LAW AND ANALYSIS

   Rev. Proc. 2015-13, as clarified and modified by Rev. Proc. 2015-33, and as

modified by Rev. Proc. 2021-34, by Rev. Proc. 2021-26, by Rev. Proc. 2017-59, and by
section 17.02(b) and (c) of Rev. Proc. 2016-1, 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 a
taxpayer’s 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
Rev. Proc. 2015-13 and implements the change in method of accounting 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 of Rev. Proc. 2015-13.

    Section 6.03(1)(a)(i) of Rev. Proc. 2015-13 provides that a taxpayer changing a

method of accounting under the automatic change procedures 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 appropriate
office of the IRS no earlier than the first day of the year of change and no later than the
date the taxpayer files the original Form 3115 with the federal income tax return for the
requested 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 the discretion to grant

a reasonable extension of time under the rules in §§ 301.9100-1(c) 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 prescribed by regulations published in the Federal
Register, or in a revenue ruling, revenue procedure, notice, or announcement published
in the Internal Revenue Bulletin.

  The requested accounting method change is a regulatory election as defined

under § 301.9100-1(b) because the due date of the change is prescribed in § 1.446-1(e)
and section 6.03(1)(a)(i) of Rev. Proc. 2015-13. Furthermore, Taxpayer's request must
PLR-124394-21 4

be analyzed under the requirements of § 301.9100-3 because the automatic provisions
of § 301.9100-2 are not applicable.

    Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3

will be granted when a 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)(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. Accordingly,
Taxpayer is granted 60 calendar days from the date of this letter to file the required
duplicate copy of the Form 3115 pertaining to the previously described accounting
change for the taxable year ended Date2. Please attach a copy of this letter ruling to
the duplicate copy of the Form 3115 to be filed with the appropriate IRS office.

   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 change discussed in this private letter ruling is
described in section 6.01 of Rev. Proc. 2019-43 or is eligible to be made under the
automatic change procedures of Rev. Proc. 2015-13; (2) Taxpayer otherwise meets the
requirements of Rev. Proc. 2015-13 to make its accounting method change using the
procedures of Rev. Proc. 2015-13; or (3) Taxpayer's method of accounting for its
depreciable tangible property is permissible.

  The ruling contained in this letter ruling is based upon information and

representations submitted on behalf of Taxpayer, with accompanying penalty of perjury
statements executed by appropriate parties. While this office has not verified any of the
material submitted in support of this request for an extension of time to file the required
copy of the Form 3115, all material is subject to verification on examination.

  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-124394-21 5

     In accordance with the power of attorney on file with this office, a copy of this

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

                                Sincerely,

                                Charles J. Magee

                                CHARLES J. MAGEE
                                Senior Counsel, Branch 7
                                Office of Associate Chief Counsel
                                (Income Tax & Accounting)

Enclosure:

copy of this letter
copy for section 6110 purposes

cc: