Late tax-year change application was treated as timely

Plain-English summary

A domestic corporation filed Form 1128 late when seeking to change from a calendar tax year to a tax year ending March 31. It requested discretionary deadline relief soon after missing the due date for the short-period return. The IRS found that the corporation acted reasonably and in good faith and that relief would not prejudice the government. It treated the late Form 1128 as timely filed, but expressed no opinion on whether the requested tax-year change was otherwise permissible.

Ruling snapshot

• Question: Could the corporation's late Form 1128 be treated as timely filed?
• Outcome: Approved as to deadline relief only.
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1 and 301.9100-3; Rev. Proc. 2002-39.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201819009 Third Party Communication: None
Release Date: 5/11/2018 Date of Communication: Not Applicable
Index Number: 9100.00-00, 9100.09-00
Person To Contact:
--------------------- -------------------------, ID No. -----------------
------------------------------- ---------------------------------------------------
-------------------------------------- Telephone Number:
-------------------------------------------------------- ----------------------
--------------------------------- Refer Reply To:
CC:ITA:B05
PLR-133730-17
Date:
January 25, 2018

LEGEND:

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

TIN = -----------------

Year = -------

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

This ruling refers to Taxpayer’s request that its Form 1128, Application to Adopt,
Change, or Retain a Tax Year, be considered timely filed under the authority found in
§ 301.9100-3 of the Procedure and Administration Regulations. Taxpayer, a domestic
corporation, filed a late Form 1128 requesting permission to change its taxable year
from a taxable year ending December 31, to a taxable year ending March 31, effective
March 31, Year.

Section 1.442-1(a) of the Income Tax Regulations provides, in part, that if a taxpayer
wants to change its annual accounting period and use a new taxable year, it must
obtain the approval of the Commissioner.

Section 1.442-1(b) provides that in order to secure the Commissioner’s consent to
change an annual accounting period, a taxpayer must file an application on Form 1128
with the Commissioner within such time and in such manner as is provided in
administrative procedures published by the Commissioner.

PLR-133730-17 2

Section 6.02(1) of Rev. Proc. 2002-39, 2002-1 C.B. 1046, provides that a taxpayer must
file a Form 1128 no earlier than the day following the end of the first effective year and
no later than the due date (not including extensions) of the federal income tax return for
the first effective tax year.

Taxpayer did not file its Form 1128 by the due date of the return for the short period (not
including extensions) required to implement such change. However, Taxpayer
requested an extension of time to file its Form 1128 under § 301.9100-3 soon
thereafter.

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 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. The Service considers
Taxpayer's late-filed Form 1128 requesting permission to change to March 31, effective
March 31, Year, timely filed.

This ruling is based upon facts and representations submitted by Taxpayer and
accompanied by a penalty of perjury statement executed by appropriate parties. 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 addresses the granting of § 301.9100-3 relief only. We express no opinion
regarding the tax treatment of the this 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 the Code and applicable
regulations or Rev. Proc. 2002-39 permit Taxpayer to change to the tax year requested
in the subject Form 1128.

PLR-133730-17 3

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.

Under the provisions of a power of attorney currently on file, we are sending a copy of
this ruling letter to Taxpayer's authorized representatives.

                                  Sincerely,



                                  Christina M. Glendening
                                  Senior Counsel, Branch 5
                                  Office of Associate Chief Counsel
                                  (Income Tax and Accounting)