9100 relief to refile the original Form 3115 after a one-day-late return spoiled an accounting-method change

Plain-English summary

To change a method of accounting under the IRS "automatic consent" procedures, a taxpayer must file Form 3115 twice: a duplicate copy with a designated IRS office, and the original attached to a timely filed tax return for the year of change. Here, a parent corporation wanted to change a subsidiary's method for capitalizing costs of self-constructed property under Section 263A. It filed the duplicate Form 3115 on time and attached the original to its consolidated return, but tax software problems kept it from transmitting the return by the extended due date; it filed one day late, which made the attached Form 3115 late too. Under Treasury Regulation Section 301.9100-3, the IRS can grant more time for a missed regulatory filing when the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The IRS found those standards met and granted 45 days to file the original Form 3115 with an amended return (identical to the copy already filed, no other changes allowed). Importantly, the ruling does not excuse the late tax return itself (penalties and interest for that still apply) and expresses no opinion on whether the method change actually qualifies for automatic consent.

Ruling snapshot

• Question: May a taxpayer get an extension of time to file the original Form 3115 for a Section 263A accounting-method change after its return was filed one day late?
• Outcome: approved (45 days to file the original Form 3115 with an amended return; late-return penalties still apply)
• Key authorities: Treas. Reg. §§ 301.9100-1, -3; Rev. Proc. 2015-13 § 6.03; IRC §§ 263A, 446(e)

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202503014                                             Third Party Communication: None
 Release Date: 1/17/2025                                       Date of Communication: Not Applicable
 Index Number: 9100.10-01
                                                               Person To Contact:
 -------------------------------                               ------------------------, ID No. ------------
 --------------------------                                    Telephone Number:
 --------------------------------                              --------------------
                                                               Refer Reply To:
 Attn: -----------------------------------------------------   CC:ITA:B06
                                                               PLR-114711-24
                                                               Date:
                                                               October 15, 2024




LEGEND

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

 CPA                    = ----------------------

 Applicant              = --------------------------------------------------------------------------------------
                          ---------------------------

 Date A                 = ---------------------------

 Date B                 = ------------------

 Taxable Year           = ------------------------------------------------------

 Date C                 = ---------------------------

 Date D                 = ---------------------------

 Date E                 = ---------------------------



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

This ruling responds to a recent letter that was submitted by Taxpayer’s representative,
CPA. CPA has requested that the Commissioner of the Internal Revenue Service give
Taxpayer an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to file the original version of a Form 3115,
Application for Change in Accounting Method, on behalf of Applicant. Taxpayer
PLR-114711-24                                2

represents that it should have filed this Form 3115, pursuant to section 6.03(1)(a)(i) of
Rev. Proc. 2015-13, 2015-5 I.R.B. 419, on or before Date A.

                                           FACTS

Taxpayer represents the following facts:

Taxpayer is the parent corporation of an affiliated group of corporations, including
Applicant, that file a consolidated federal income tax return. This consolidated federal
income tax return is filed on a fiscal year ending on Date B. Taxpayer and Applicant
provide customer experience services and technology.

Taxpayer engaged CPA to prepare a Form 3115 to change Applicant’s method of
accounting “for capitalizing costs to self-constructed property under section 263A of the
Internal Revenue Code,” which Taxpayer believes could be filed using the automatic
consent procedures of Rev. Proc. 2015-13 and Rev. Proc. 2023-24, 2023-28 I.R.B.
1207.

Taxpayer represents that it timely filed Form 7004, Application for Automatic Extension
of Time to File Certain Business Income Tax, and Other Returns, which provided
Taxpayer an extension until Date A to file its consolidated federal income tax for
Taxable Year.

Taxpayer states that it did file the required duplicate copy of Form 3115 on Date C, prior
to the extended due date of Date A.1 The original copy of the Form 3115 was attached
to Taxpayer’s tax return for Taxable Year, and Applicant “implemented the method
change and took into account the one-fourth of the section 481(a) adjustment, in
accordance with Section 7.03(1) of Rev. Proc. 2015-13.”

However, due to technological issues with its tax preparation software, Taxpayer could
not transmit its tax return to the Internal Revenue Service by Date A. The following day,
on Date D, Taxpayer remedied the issues and filed its consolidated federal income tax
return. Within days, on Date E, Taxpayer engaged CPA, who confirmed that the
consolidated federal income tax return was accepted by the IRS on Date D and thus the
return and the Form 3115 were late. Subsequently, Taxpayer submitted this request for
an extension of time to file the original copy of Taxpayer’s Form 3115.

                                 RULING REQUESTED

Taxpayer requests an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 to
file the original copy of the Form 3115 required by Rev. Proc. 2015-13 in order to


1Taxpayer also represents that it timely provided the Internal Revenue Service’s
examining agent with a copy of the Form 3115.
PLR-114711-24                                3

change Applicant’s method for capitalizing costs to self-constructed assets under IRC
§ 263A.

                                  LAW AND ANALYSIS

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 IRC § 446(e) and the Income
Tax Regulations thereunder.

Section 6.03(1)(a)(i) 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.

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a
reasonable extension of time under rules set forth in §§ 301.9100-2 and 301.9100-3 to
make certain regulatory elections.

Sections 301.9100-1 through 301.9100-3 provide the standard 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 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.

                                     CONCLUSION

Based solely on the representations submitted, we conclude that the requirements of
§§ 301.9100-1 and 301.9100-3 have been satisfied in this case. Accordingly, we
hereby grant an extension of time for Taxpayer to file the original Form 3115 changing
Applicant’s method of capitalizing costs to self-constructed assets under § 263A for
Taxable Year, with an amended consolidated federal income tax return. No other
revision to this return can be made. The Form 3115 must be identical to the copy of the
Form 3115 that had been filed previously with the appropriate office of the Internal
Revenue Service. The extension shall be for a period of 45 days from the date of this
letter ruling. Please attach a copy of this letter ruling to the amended return.
PLR-114711-24                                 4

Except as expressly set forth above, we neither express nor imply any opinion
concerning the tax consequences of the facts described above under any other
provision of the Code or regulations. Specifically, we have no opinion, either expressed
or implied, concerning whether the accounting method change Taxpayer has attempted
to make on behalf of Applicant is eligible to be made under the automatic consent
procedures of Rev. Proc. 2015-13 and Rev. Proc. 2023-24, or whether Taxpayer
otherwise meets the requirements of Rev. Proc. 2015-13 to make this accounting
method change using Rev. Proc. 2015-13. Further, we express no opinion regarding
the propriety of Applicant’s proposed method of accounting under § 263A that is
reflected in the Form 3115. Lastly, we emphasize that this letter ruling does not grant
any extension of time for the filing of Taxpayer’s consolidated federal income tax return
for Taxable Year. Taxpayer is subject to any appropriate penalty and interest resulting
from its failure to have its tax return filed timely.

The ruling contained in this letter ruling is based upon information and representations
submitted by CPA on behalf of itself, Taxpayer, and Applicant, with an accompanying
penalties of perjury statement executed by an appropriate party. 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 Form 3115, all material is subject to verification on examination.

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

In accordance with the power of attorney on file with our office, we will send a copy of
this letter to each of Taxpayer’s authorized representatives.

                                          Sincerely,



                                          Cheryl L. Oseekey
                                          Senior Counsel, Branch 6
                                          Office of Associate Chief Counsel
                                          (Income Tax & Accounting)

Enc.: Copy for § 6110 purposes