Late Form 1128 to change a corporation's tax year treated as filed on time

Plain-English summary

A corporation wanted to change its tax year from a December 31 year-end to a
June 30 year-end. To do that automatically, it had to file Form 1128 by the due
date (including extensions) of the short-period return that bridges the change.
The company's tax preparer forgot to request an extension for the short-period
return, so the filing deadline passed and the Form 1128 was late, though filed
within 90 days of the original due date. The company asked the IRS to treat the
form as timely under the section 301.9100 relief rules, which allow extra time
when a taxpayer acted reasonably and in good faith and the government is not
harmed. The IRS agreed and ruled that the late Form 1128 will be considered
timely filed. The relief is limited to the timeliness question: the IRS did not
decide whether the company actually qualifies to change its year under section
442 and Revenue Procedure 2006-45, which the service center will process.

Ruling snapshot

• Question: Should a late Form 1128 seeking to change a corporation's annual accounting period be treated as timely filed?
• Outcome: Approved (section 301.9100-3 relief granted; form treated as timely)
• Key authorities: Treas. Reg. § 301.9100-3; IRC § 442; Rev. Proc. 2006-45; Treas. Reg. § 1.442-1(b)(1)

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202328020                                             Third Party Communication: None
 Release Date: 7/14/2023                                       Date of Communication: Not Applicable
 Index Number: 9100.09-00
                                                               Person To Contact:
 ------------------                                            ------------------------, ID No. -----------------
 ----------------                                              Telephone Number:
 --------------------------------------------------------      -------------------
 ----------------------------------------                      Refer Reply To:
 --------------------------------------                        CC:ITA:B4
                                                               PLR-124303-22
                                                               Date:
                                                               April 14, 2023




Legend

 Taxpayer       =   -----------------------------------------------------------------------------------
 Year           =   -------
 Date 1         =   ---------------------------
 Date 2         =   --------------------------



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

This ruling is in reference to Taxpayer’s Form 1128, Application To Adopt, Change, or
Retain a Tax Year, requesting permission to change its accounting period from a
taxable year ending December 31, to a taxable year ending June 30, effective
June 30, Year. Taxpayer requested that the Form 1128 be considered timely filed
under the authority in § 301.9100-3 of the Procedure and Administration Regulations.

Taxpayer, a domestic corporation, is currently on a taxable year ending December 31.
Taxpayer’s professional tax preparer inadvertently failed to request an extension of time
to file the short period return. Due to this oversight, the short period return and Form
1128 were due on Date 1. Taxpayer filed this request on Date 2, which is within 90
days after Date 1, the due date of the return for the short period.

Rev. Proc. 2006-45, 2006-2 C.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 7.01(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.
PLR-124303-22                                       2


Section 301.9100-3(a) provides that requests for extension 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 interest 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 June 30, effective June 30, Year, will be
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, please forward Form 1128, along with a copy of this letter, to the
Service Center where the Taxpayer's returns are filed, within 60 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 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 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.
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.

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. Enclosed is a copy of the letter
ruling showing the deletions proposed to be made when it is disclosed under § 6110.
1 The taxpayer's application for a change in accounting period will be processed under Rev. Proc. 2006-

45.
PLR-124303-22                                  3


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



                                       Sincerely,


                                       Mon Lam
                                       Senior Counsel, Branch 4
                                       Office of Associate Chief Counsel
                                       (Income Tax & Accounting)




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