Late Form 1128 to change an accounting period allowed under 9100 relief

Plain-English summary

A taxpayer wanted to change its tax year (accounting period) and needed to file Form 1128 to get IRS permission, but missed the filing deadline. Under Rev. Proc. 2002-39, Form 1128 must be filed by the due date (without extensions) of the return for the first year the change takes effect. The taxpayer filed late but soon afterward asked the IRS for more time under the "9100 relief" rules (Treasury Regulation 301.9100-3), which let the IRS extend the time to make a regulatory election when the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The taxpayer was not under examination when it requested relief. The IRS found the standard met and gave the taxpayer 45 days from the date of the letter to file the Form 1128, along with the required $5,000 user fee. The IRS ruled only on the extension of time; it did not decide whether the taxpayer is actually allowed to change to the requested tax year.

Ruling snapshot

• Question: Should the IRS grant an extension of time to file a late Form 1128 to change the taxpayer's accounting period?
• Outcome: Approved (9100 relief granted; 45 days to file Form 1128)
• Key authorities: Treas. Reg. § 301.9100-3; Rev. Proc. 2002-39; Rev. Proc. 2023-1

Full text (IRS public release)

Internal Revenue Service                                Department of the Treasury
                                                        Washington, DC 20224

Number: 202319011                                       Third Party Communication: None
Release Date: 5/12/2023                                 Date of Communication: Not Applicable
Index Number: 9100.09-00                                Person To Contact:
                                                        -------------------, ID No.
---------------------
                                                        Telephone Number:
                                                        --------------------
                                                        Refer Reply To:
                                                        CC:ITA:B04
                                                        PLR-117513-22
                                                        Date:
                                                        February 14, 2023


Taxpayer = -------------------------------------------------------------
Year     = -------
Date     = ---------------------------


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

This letter is in response to Taxpayer’s request, filed on Date, for an extension of time
under the authority contained in § 301.9100-3 of the Procedure and Administration
Regulations, to file Form 1128, Application to Adopt, Change, or Retain a Tax Year.
Taxpayer is requesting to change its accounting period for federal income tax purposes
from a taxable year ending -------------------to a taxable year ending        , effective ----
-----------, Year.

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 effect such change. However, Taxpayer requested an
extension of time to file its Form 1128 under § 301.9100-3 soon thereafter. Taxpayer
has represented that it was not under examination on Date when it requested relief
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 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. Taxpayer’s Form 1128,
requesting permission to change to a taxable year ending                                 , effective --------------
-------------------------------------------------------------------------------------------------------------------,
Year, must be filed under the provisions of Rev. Proc. 2002-39 within 45 days of this
letter. A copy of this letter must be attached to Taxpayer’s Form 1128.

Pursuant to section 7.04 of Rev. Proc. 2023-1, 2023-1 IRB 1, a taxpayer may submit the
Form 1128 by mail, facsimile or by compressed and encrypted email attachments using the
electronic submission procedures described in section 7.04 of Rev. Proc. 2023-1 (including
electronic images of the Acknowledgement of Risks of Email as provided in Appendices G
and H of Rev. Proc. 2023-1). Taxpayer may submit the Form 1128 through facsimile at
(877) 773-4950, or Taxpayer may submit the Form 1128 as an encrypted email attachment
to [email protected]. If Taxpayer wishes to mail the Form 1128, mail the
request to:

                          Internal Revenue Service
                          Associate Chief Counsel (Income Tax & Accounting)
                          Attention: CC:PA:LPD:DRU
                          Kyle Walker (CC:ITA)
                          Post Office Box 7604
                          Benjamin Franklin Station
                          Washington, D.C. 20044

Please note that a user fee of $5,000 is required for an application filed under Rev. Proc.
2002-39. The $5,000 user fee specified in Appendix A of Rev. Proc. 2023-1, 2023-1 I.R.B.
must be paid in U.S. dollars and made through www.pay.gov.

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 this 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, we express no opinion as to whether the Code and applicable regulations
or Rev. Proc. 2002-39 permit the taxpayer to change to the tax year requested in the
subject Form 1128.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) 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 the taxpayer’s authorized representative.


                                         Sincerely,



                                         Lisa Mojiri-Azad
                                         Senior Technician Reviewer
                                         Branch 4
                                         Office of Associate Chief Counsel
                                         (Income Tax and Accounting)

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