PLR 9950023: Late accounting year change application treated as timely

Plain-English summary

Taxpayers filed Form 1128 after the deadline to request a change in their accounting year. They said an error or misunderstanding caused the delay, and the filing occurred within 90 days of the due date. The IRS found that they acted reasonably and in good faith and that relief would not prejudice the government. It treated the late Form 1128 as timely and sent it to the service center for processing. The ruling expressly left open whether the requested tax year change itself was permitted.

Ruling snapshot

• Question: Could the taxpayers' late Form 1128 be treated as timely filed?
• Outcome: Approved for filing timeliness; no decision on the requested accounting year change.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b), 301.9100-3.

Full text (IRS public release)

INTERNAL REVENUE SERVICE
Index Nos.: 9100.09-00
Number: 199950023
Release Date: 12/17/1999

September 17, 1999

EIN:

Dear
This is in reference to a Form 1128, Application to Adopt,
Change, or Retain a Tax Year, submitted on behalf of the above- named taxpayers, requesting permission to change their accounting period, for federal income tax purposes, from a taxable year ending , to a taxable year ending ,
effective
. The taxpayers has requested that
the Form 1128 be considered timely filed under the authority contained in § 301.9100-3 of the Procedure and Administration Regulations.

The taxpayers’ Form 1128 requesting a change in accounting
period to a tax year ending
was due on or before
. Information furnished indicates that due to an error or misunderstanding, the form was not timely filed. However, the form was filed within 90 days of the due date. The taxpayers acted reasonably and in good faith, and granting the extension will not prejudice the interests of the Government.

Section 1.442-1(b) of the Income Tax Regulations provides that in order to secure the Commissioner's consent to a change in accounting period, the taxpayers must file an application on Form 1128 with the Commissioner on or before (a) the 15th day of the second calendar month following the close of the short period or (b), if Rev. Proc. 92-13, 1992-1 C. B. 665 is applicable, as in the instant case, on or before the due date (including extensions) of the tax return for the short period.

Section 301.9100-3(a) of the regulations provides that requests for extensions of time for regulatory elections that do not meet the requirements of § 301.9100-2 (automatic extensions), such as the instant case, must be made under the rules of § 301.9100-3. Requests for relief subject to § 301.9100-3 will be granted when the taxpayers provide evidence to establish that the taxpayers acted reasonably and in good faith, and that the granting of relief will not prejudice the interests of the government.
Based on the facts and information submitted and the representations made, it is held that the taxpayers have acted reasonably and in good faith, and that the granting of relief will not prejudice the interests of the government. Accordingly,

-2-

the requirements of the regulations for the granting of relief have been satisfied in this case, and taxpayers’ late filed Form 1128 requesting permission to change to a tax year ending
, effective
,is considered timely
filed.

The ruling contained in this letter is based upon facts and representations submitted by the taxpayers 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. Verification of the factual information, representations, and other data may be required as part of an examination process.
This ruling addresses the granting of § 301.9100-3 relief only. No opinion is expressed regarding the tax treatment of the instant transaction under the provisions of any other sections of the Code or regulations that may be applicable thereto, or regarding the tax treatment of any conditions existing at the time of, or effects resulting from, the instant transaction. Specifically, no opinion is expressed as to whether the taxpayers are permitted under the Code and applicable regulations to change to the tax year requested in the subject Form 1128.

A copy of this letter ruling and the taxpayers’ Form 1128 are being forwarded to the service center where the taxpayers file their federal income tax returns with instructions that the Form 1128 be considered timely filed, and processed in accordance with established procedures under Rev. Proc. 92-13.

In accordance with the provisions of a power of attorney currently on file, we are sending a copy of this letter ruling to the taxpayers’ authorized representatives.

This ruling is directed only to the taxpayers that requested it. Section 6110(j)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent.

Sincerely yours,

Assistant Chief Counsel
(Income Tax and Accounting)

/s/ Thomas A. Luxner

By
Thomas A. Luxner
Acting Deputy Assistant Chief Counsel

Enclosures:
Copy of this letter for § 6110 purposes