Homeowners association's late tax-year change form is treated as timely

Plain-English summary

A homeowners association wanted to change from a calendar tax year to a March 31 year-end so its accounting period would align with its revenue cycle. It assigned Form 1128 to outside tax professionals, who inadvertently missed the filing deadline and submitted the form after discovering the error. The IRS found that the association acted reasonably and in good faith and that relief would not prejudice the government. It treated the late Form 1128 as timely filed for the requested effective date. The ruling did not decide whether the association otherwise qualified to make the tax-year change.

Ruling snapshot

• Question: Could the homeowners association obtain relief for a late Form 1128 requesting a March 31 tax year?
• Outcome: approved
• Key authorities: Treas. Reg. §§ 301.9100-1 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                   Department of the Treasury
                                                           Washington, DC 20224

Number: 201726003                                          [Third Party Communication:
Release Date: 6/30/2017                                    Date of Communication: Month DD, YYYY]
Index Number: 9100.09-00
                                                           Person To Contact:
-----------------------                                    ------------------------, ID No. ------------------
----------------------------------------------             ----------------------------------------------------
-----------------------------                              Telephone Number:
--------------------------------------------               ----------------------
                                                           Refer Reply To:
                                                           CC:ITA:B04
In Re: -------------------------------------------         PLR-102643-17
-----------------------------------------                  Date:
                                                           April 04, 2017




                  TY: -------

Legend:

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

Year = -------




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

This letter ruling refers to your request that the Internal Revenue Service grant an
extension of time, under the authority in § 301.9100-3 of the Regulations on Procedure
and Administration, to file Form 1128, Application to Adopt, Change, or Retain a Tax
Year. Taxpayer requests to change its accounting period, for federal income tax
purposes, from a taxable year ending December 31 to a taxable year ending March 31,
effective March 31, Year, and requests that Form 1128 be considered timely filed under
§ 301.9100-3.

Taxpayer, a Homeowners Association within the meaning of § 528 of the Internal
Revenue Code, is requesting relief. Taxpayer uses an overall accrual method of
accounting for federal income tax purposes.

Although Taxpayer has maintained an accounting period ending December 31, it
decided to change to a March 31 year-end in order to align with its revenue cycle.
Taxpayer assigned filing of Form 1128 to its external tax professionals. The tax
PLR-102643-17                                 2

professionals inadvertently overlooked the required filing date, but filed the forms as
soon as the error was discovered. Thus, Taxpayer has requested an extension of time
to file its Form 1128 under § 301.9100-3.

Section 301.9100-3(a) 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 taxpayer provides evidence to
establish that the taxpayer 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, we
conclude that Taxpayer has acted reasonably and in good faith, and that the granting of
relief will not prejudice the interests of the government. Accordingly, Taxpayer has
satisfied the requirements of the regulations for the granting of relief, and Taxpayer’s
late filed Form 1128 requesting to change to March 31, effective March 31, Year, is
considered timely filed. However, the granting of an extension of time is not a
determination that Taxpayer is otherwise eligible to make the election. See § 301.9100-
1(a).

This ruling addresses the granting of § 301.9100-3 relief only. We express no opinion
regarding the tax treatment of the instant transaction under the provisions of any other
sections of the Code or regulations that may be applicable, or regarding the tax
treatment of any conditions existing at the time of, or effects resulting from, the instant
transaction. Specifically, we express no opinion as to whether Taxpayer is permitted
under the Code and applicable regulations to change to the tax year requested in the
Form 1128.

This ruling is based upon facts and representations that Taxpayer submitted,
accompanied by a penalty of perjury statement. This office has not verified any of the
material submitted in support of the request for a ruling. However, as part of an
examination process, the Service may verify the factual information, representations,
and other data submitted.

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent. Enclosed is a copy of the
letter ruling showing the deletions proposed to be made when it is disclosed under
§ 6110.
PLR-102643-17                               3

In accordance with the Power of Attorney on file with this office, we are sending a copy
of this letter to your authorized representative.

                                         Sincerely,



                                         Angella L. Warren
                                         Assistant to the Branch Chief, Branch 4
                                         Office of Associate Chief Counsel
                                         (Income Tax & Accounting)