Late accounting-period change application treated as timely

Plain-English summary

A corporation sought to change its tax year from June 30 to March 31 but filed Form 1128 after the short-period return deadline in Revenue Procedure 2006-45. It requested discretionary relief shortly after the missed deadline. The IRS found that the corporation acted reasonably and in good faith and that relief would not prejudice the government. It therefore treated the late Form 1128 as timely filed and instructed the corporation to forward the application and ruling to the Kansas City Service Center within 45 days. The ruling addressed only the filing extension and did not decide whether the requested tax-year change was otherwise permitted.

Ruling snapshot

• Question: May the corporation's late Form 1128 to change its annual accounting period be treated as timely filed?
• Outcome: approved
• Key authorities: IRC § 442; Treas. Reg. §§ 1.442-1(b)(1) and 301.9100-3; Rev. Proc. 2006-45

Full text (IRS public release)

Internal Revenue Service                                   Department of the Treasury
                                                           Washington, DC 20224

Number: 202008006                                          Third Party Communication: None
Release Date: 2/21/2020                                    Date of Communication: Not Applicable
Index Number: 9100.09-00
                                                           Person To Contact:
----------------------------                               -----------------------, ID No. -----------------
----------------------------                               Telephone Number:
----------------------------------------------------       --------------------
--------------------------------------                     Refer Reply To:
-------------------------                                  CC:ITA:B04
-------------                                              PLR-125287-19
-----------------------------------                        Date:
                                                           November 21, 2019

LEGEND
Taxpayer = --------------------------------------------------------------------------------------------------------------------
Year     = -------


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

This letter ruling is in reference to Taxpayer’s request that its Form 1128, Application to
Adopt, Change, or Retain a Tax Year, be considered timely filed under the authority in
§ 301.9100-3 of the Regulations on Procedure and Administration. Taxpayer filed a late
Form 1128 to change its accounting period, for federal income tax purposes, from a
taxable year ending June 30, to a taxable year ending March 31, effective March 31,
Year.

Rev. Proc. 2006-45, 2006-45 I.R.B. 851, provides procedures for certain corporations to
obtain automatic approval to change their annual accounting period under § 442 of the
Internal Revenue Code. A corporation complying with all the applicable provisions of
this revenue procedure has obtained the consent of the Commissioner of the Internal
Revenue Service to change its annual accounting period. Section 7.02(2) of Rev. Proc.
2006-45 provides that a Form 1128 filed pursuant to the revenue procedure will be
considered timely filed for purposes of § 1.442-1(b)(1) of the Income Tax Regulations
only if it is filed on or before the time (including extensions) for filing the return for the
short period required to effectuate the change.

The information furnished indicates that Taxpayer did not file its Form 1128 by the due
date of the return for the short period required to effectuate the change. However,
Taxpayer requested an extension of time to file its Form 1128 under § 301.9100-3
shortly after the due date.

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
PLR-125287-19                                  2

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. 1

Because a change in accounting period under Rev. Proc. 2006-45 is under the
jurisdiction of the Director, Internal Revenue Service Center, where the taxpayer’s
returns are filed, we are returning your application so that you may forward it, along with
a copy of this letter, to the Director, Kansas City, MO Service Center, within 45 days of
the date of this letter. Any further communication regarding this matter should be
directed to the Service Center.

This ruling is based upon facts and representations submitted by the taxpayer and 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. 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 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 the taxpayer is permitted
under the Code and applicable regulations to change to the tax year requested in the
Form 1128, or whether the change may be effected under Rev. Proc. 2006-45.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

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.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representatives.



1The taxpayer’s application for a change in accounting period will be processed under
Rev. Proc. 2006-45.
PLR-125287-19                                 3

A copy of this letter must be attached to any income tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the
letter ruling.

                                       Sincerely,



                                       Ronald J. Goldstein
                                       Senior Technician Reviewer
                                       Office of Chief Counsel
                                       (Income Tax & Accounting)