Private Letter Ruling
202314004
Released April 7, 2023
Approved
Late accounting-method-change forms treated as timely
Apply this to your situation
This page covers one taxpayer's ruling from 2023, which can't be cited as precedent. Ezel answers your situation under the current Code and IRS guidance, with citations.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)
Plain-English summary
A parent company requested filing relief for controlled foreign corporations that changed how they accounted for rent expense under the automatic consent procedures. The parent intended to extend its consolidated return but failed to file Form 7004 on time, so the return and the attached Forms 3115 were late, and the duplicate Forms 3115 also were not timely filed with the proper IRS office. The IRS found that the requirements for discretionary relief under Treasury Regulations sections 301.9100-1 and 301.9100-3 were satisfied. It treated both the originals attached to the late return and the duplicate copies filed on the same redacted date as timely. The ruling did not extend the deadline for Form 7004 or the consolidated return and did not decide whether the accounting-method changes otherwise qualified for automatic consent.
Ruling snapshot
- Question: May the parent receive extra time to file original and duplicate Forms 3115 for its controlled foreign corporations' rent accounting-method changes?
- Outcome: Approved
- Key authorities: IRC §§ 446(e), 467, and 481(a); Treas. Reg. §§ 1.467-1(d)(2)(iii), 301.9100-1, and 301.9100-3; Rev. Proc. 2015-13 and Rev. Proc. 2019-43
Full text (IRS public release)
Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 202314004 Third Party Communication: None
Release Date: 4/7/2023 Date of Communication: Not Applicable
Index Number: 9100.09-00 Person To Contact:
-------------------, ID No. ----------------
-----------------------
Telephone Number:
------------------------- --------------------
--------------------------
Refer Reply To:
---------------------------
CC:ITA:B04
----------------------
PLR-112960-22
Date:
January 04, 2023
Parent = ------------------------------------------------------
Entities = ----------------------------------- ------------------
Return = --------------------------------
Date1 = --------------------- ------------------
Date2 = --------------------- ------------------
Date3 = ------------------
Date4 = ------------------------
Date5 = -----------------------
Date6 = -------------
Dear ----- -------:
This letter ruling responds to a letter dated June 29, 2022, submitted by Parent on
behalf of Entities. Parent is requesting an extension of time pursuant to §§ 301.9100-1
and 301.9100-3 of the Procedure and Administration Regulations to file the original and
the signed duplicate copies of Forms 3115, Application for Change in Accounting
Method, on behalf of Entities. Parent should have filed the originals and copies of these
originals pursuant to section 6.03(1)(a)(i) of Rev. Proc. 2015-13, 2015-5 I.R.B. 419, 432,
for the taxable year beginning Date1, and ended Date2.
Entities are controlled foreign corporations (CFCs). All controlling U.S shareholders (as
defined in § 1.964-1(c)(5)(i) of the Income Tax Regulations) of Entities to which the
request relates are members of the Parent’s consolidated group. Beginning for the
taxable year beginning Date1, Parent wanted to change Entities’ method of accounting
for rent expense to deduct rent expense in accordance with the rent payment schedule
in the lease to comply with § 1.467-1(d)(2)(iii), effective for the taxable year beginning
Date1 (hereinafter the "Accounting Method Change"). Entities were eligible to make the
Accounting Method Change under the automatic consent procedures of Rev. Proc.
2015-13 and Rev. Proc. 2019-43, 2019-48 I.R.B. 1107 as the change is described in
section 21.01 of Rev. Proc. 2019-43 (change for fixed rent to the rent allocation method
provided in § 1.467-1(d)(2)(iii)). Parent should have completed the required originals of
PLR-112960-22 2
the Forms 3115, reflecting the desired accounting method change, and attached the
original to Parent’s timely filed, federal income tax return for the taxable year beginning
Date1 and ended Date2. The due date for the Return was Date3.
Because Parent did not have all the required information necessary to file a complete
and accurate return on or before Date3, Parent intended to file Form 7004, Application
for Automatic Extension of Time To File Certain Business Income Tax, and obtain an
extension of time to file the Return. However, due to a series of events, Parent failed to
timely file Form 7004, for the taxable year ending Date2 to extend the due date for the
Return. Not realizing that the time to file the Return had not been properly extended to
Date4, P completed the preparation of the Return and e-filed the Return on Date5. The
Return included a copy of the executed Form 3115 under the belief, at the time, that the
Form 7004 extension request had been timely filed and the Return properly extended.
On Date5, the Internal Revenue Service confirmed receipt of the Return. Around
Date6, while preparing its return for the following year, Parent self-discovered that the
Form 7004 had not been timely filed and the Return was filed late.
As a result of Parent's failure to timely file Form 7004 for the taxable year beginning
Date1, and ended Date2, the original Forms 3115 were not attached to a timely filed
federal income tax return for that taxable year, and the signed duplicate copies of C's
Form 3115 was not timely filed with the appropriate IRS office as required by section
6.03(1)(a)(i) of Rev. Proc. 2015-13.
LAW AND ANALYSIS
Rev. Proc. 2015-13 provides the automatic change procedures and the non-automatic
change procedures by which a taxpayer may obtain consent to change its methods of
accounting. Pursuant to section 9 of Rev. Proc. 2015-13, a taxpayer that complies with
all the applicable provisions of Rev. Proc. 2015-13 and implements the change in
method of accounting on its federal income tax return for the requested year of change
to which the original Form 3115 is attached pursuant to section 6.03 of Rev. Proc. 2015-
13, has obtained the consent of the Commissioner of Internal Revenue to change its
method of accounting under § 446(e) and the regulations thereunder.
Section 6.03(1)(a)(i) of Rev. Proc. 2015-13 provides that a taxpayer changing a method
of accounting under the automatic change procedures of 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 signed copy of the original Form 3115 must be filed with the
appropriate office of the IRS no earlier than the first day of the requested year of change
and no later than when the original Form 3115 is filed with the federal income tax return
for the requested year of change.
PLR-112960-22 3
Section 301.9100-1(c) provides that the Commissioner has discretion to grant a
reasonable extension of time under the 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 standards 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.
Section 301.9100-3(c)(2) imposes special rules for accounting method regulatory
elections. This section provides, in relevant part, that the interests of the Government
are deemed to be prejudiced except in unusual and compelling circumstances when the
accounting method regulatory election for which relief is requested is subject to the
procedure described in § 1.446-1(e)(3)(i) or the relief requires an adjustment under
§ 481(a) (or would require an adjustment under 481(a) if the taxpayer changed to the
accounting method for which relief is requested in a taxable year subsequent to the
taxable year the election should have been made).
CONCLUSION
Based solely on the facts and representations submitted, we conclude that the
requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Accordingly,
Parent is granted an extension of time to:
1. file the original of the Forms 3115 changing Entities' methods of accounting,
beginning for the taxable year beginning Date1, and ended Date2, and
2. file the signed duplicate copies of the original Form 3115 with the appropriate
office of the IRS.
In this regard, we will consider the filing of the original Form 3115 with Parent's federal
income tax return for the taxable year beginning Date1, and ended Date2, that was filed
on Date5, to be timely made. We also will consider the filing of the signed duplicate
copies of the original Forms 3115 with the IRS office in Ogden, Utah, on Date5, to be
timely made.
Except as expressly set forth above, we express no opinion concerning the tax
consequences of the facts described above under any other provision of the Code or
regulations. Specifically, no opinion is expressed or implied concerning whether (1) the
accounting method changes Entities have made are eligible to be made under the
PLR-112960-22 4
automatic change procedures of Rev. Proc. 2015-13 or (2) Entities otherwise meet the
requirements of Rev. Proc. 2015-13 to make the accounting method change using the
automatic change procedures of Rev. Proc. 2015-13. Lastly, we emphasize that this
letter ruling does not grant any extension of time for the filing of Parent's Form 7004 or
its consolidated federal income tax return for the taxable year beginning Date1 and
ended Date2.
The ruling contained in this letter ruling is based upon facts and representations
submitted by Parent with an accompanying penalty of perjury statement executed by
the 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 Forms 3115, all
material is subject to verification on examination.
This letter ruling is directed only to Parent, who requested it on behalf of Entities.
Section 6110(k)(3) provides that it may not be used or cited as precedent
In accordance with the power of attorney, we are sending copies of this letter ruling to
Parent's authorized representatives.
Sincerely,
Lisa Mojiri-Azad
Senior Technician Reviewer
Branch 4
Office of Associate Chief Counsel
(Income Tax and Accounting)
Enclosures
cc:
PLR-112960-22 5
ATTACHMENT
Date1 Date2
Tax Year of Tax year of
Taxpayer TIN Change begins Change Ends
(MM/DD/YYYY) (MM/DD/YYYY)
--------------------------------------------- ----------------- -------------- ----------------
---------
--------------------------- ------------------ -------------- ----------------
--
------------------------------------------ ----------------- -------------- ----------------
------------------------------- ----------------- -------------- ----------------
-------------------------------------------- ----------------- -------------- ----------------
---------------------------------
--------------------------- ----------------- -------------- ----------------
--------------------------------- ----------------- -------------- ----------------
----------------------------------
---------------------------------------- ----------------- -------------- ----------------
----------------------
----------------------------- ----------------- -------------- ----------------
----------------------------------- ----------------- -------------- ----------------
------------------------- ----------------- -------------- ----------------
------------------------------------- ----------------- -------------- ----------------
--------------------------------------------- ----------------- -------------- ----------------
-----
------------------------------------- ----------------- -------------- ----------------
----------------------------- ----------------- -------------- ----------------
------------------------------------------- ----------------- -------------- ----------------
------------------
------------------------------ ----------------- -------------- ------------
------------------------------------------
--------------
---------------- ----------------- -------------- ----------------
------------------------------------------ ----------------- -------------- ----------------
------------
--------------------------------------------- ----------------- -------------- ----------------
------
-------------------------------- ----------------- -------------- ----------------
---------------------------------------------
---------
------------------------------------- ------------------ -------------- ----------------
--
------------------------ ----------------- -------------- ----------------
PLR-112960-22 6
------------------------------------------ ----------------- -------------- ----------------
----------------------------------
-------------------------------------------- ----------------- -------------- ----------------
--------------------------------------------- ----------------- -------------- ----------------
-------
----------------------------------------- ----------------- -------------- ----------------
---------------------------------------- ----------------- -------------- ----------------
------------------------------------- ----------------- -------------- ----------------
----------------------------------
--------------- ----------------- -------------- ----------------
--------------------------------------------- ----------------- -------------- ----------------
--
--------------------------------------- ----------------- -------------- ----------------
------------------------
----------------------------------- ----------------- -------------- ----------------
---------------
------------------------------------- ----------------- -------------- ----------------
---------------------------------------------
------------------------------------------- ----------------- -------------- ----------------
------------------------------ ------------------ -------------- ----------------
---------------------- --
--------------------------------------------- ------------------ -------------- ------------
-------- --
------------------------------------------ ------------------ -------------- ----------------
-------------------------- --
----------------------------- ------------------ -------------- --------------
--
---------------------------------------- ----------------- -------------- ----------------
---------------------------- ------------------ -------------- ----------------
------------------------- --
---------------------------- ------------------ -------------- ----------------
------------------------------ --
---------------------------- ------------------ -------------- ----------------
------------------------ --
------------------------------------- ------------------ -------------- ----------------
--
---------------------------- ------------------ -------------- ----------------
----------------------------------- --
----------------------------------
------------------------------------------ ------------------ -------------- ----------------
------------------------- --
---------------------------------------- ------------------ -------------- ----------------
--
------------------------------------------- ------------------ -------------- ----------------
--
PLR-112960-22 7
---------------- ----------------- -------------- ----------------
--------------------------------------------- ----------------- -------------- --------------
-
--------------------------------------------- ----------------- -------------- ----------------
--------
------------------------------ ------------------ -------------- ----------------
--
--------------------------------------------- ------------------ -------------- ----------------
- --
---------------------------- ----------------- -------------- ----------------
--------------------------------------------- ----------------- -------------- ----------------
---
---------------------------------- ------------------ -------------- --------------
--
---------------------------- ------------------ ------------ ----------------
---------------------------------- --
----------------------------- ------------------ ------------ ----------------
---------------------------------- --
Get today's answer for your situation
You just read what the IRS ruled for one taxpayer in 2023, and it can't be cited as precedent. Ezel checks the current Internal Revenue Code and IRS guidance and answers your specific situation, with citations.
Opens in Ezel Pro. Every answer cites the authority it relies on.