More time granted to file duplicate accounting-method form

Plain-English summary

A parent corporation's accounting firm prepared a Form 3115 for two subsidiaries to change their accounting methods under section 263A. The firm timely filed the consolidated return with the original form attached and mailed the required duplicate on the same day. It later discovered that the duplicate had gone to one of the taxpayer's operating locations instead of the proper IRS service center, then forwarded it to the correct address. The IRS concluded that the taxpayer met the standards for reasonable, good-faith regulatory relief without prejudicing the government. It granted 45 days to file an identical duplicate Form 3115 with a copy of the ruling. The IRS did not decide whether the proposed method changes qualified for automatic consent or were substantively proper.

Ruling snapshot

• Question: May the taxpayer receive more time to file the required duplicate Form 3115 after it was inadvertently mailed to the wrong location?
• Outcome: Approved, with the duplicate due within 45 days
• Key authorities: IRC §§ 263A, 446(e); Treas. Reg. §§ 301.9100-1, 301.9100-3; Rev. Proc. 2015-13; Rev. Proc. 2022-14

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 202350012                                             Third Party Communication: None
Release Date: 12/15/2023                                      Date of Communication: Not Applicable
Index Number: 9100.10-00
                                                              Person To Contact:
------------------------------------                          ------------------------, ID No. ------------
------------------------                                      Telephone Number:
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                                                              Refer Reply To:
----------------------------------------                      CC:ITA:B06
                                                              PLR-114429-23
                                                              Date:
                                                              September 20, 2023




LEGEND

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

Applicant 1            =      ------------------------------------------------------------------------------------
                              -------------------------------

Applicant 2            =      ------------------------------------------------------------------------------------
                              -------------------------------

CPA                    =      --------------------

Date A                 =      -----------------------

Date B                 =      -----------------------

Year 1                 =      ---------------------------------------


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

This ruling responds to a recent letter that was submitted by Taxpayer’s representative,
CPA. CPA has requested that the Commissioner of the Internal Revenue Service give
Taxpayer an extension of time pursuant to §§ 301.9100-1 and 301-9100-3 of the
Procedure and Administration Regulations to file the duplicate copy of a Form 3115,
Application for Change in Accounting Method, on behalf of Applicant 1 and Applicant 2
(collectively, Applicants). Taxpayer should have filed this Form 3115, pursuant to
section 6.03(1)(a)(i) of Rev. Proc. 2015-13, 2015-5 I.R.B. 419, on or before Date A.

PLR-114429-23                                2

                                          FACTS

Taxpayer represents the following facts:

Taxpayer is the parent corporation of an affiliated group filing a consolidated federal
income tax return. Applicant 1 and Applicant 2 are corporations and members of
Taxpayer’s consolidated group. Taxpayer engaged CPA to prepare and file the
consolidated return for Year 1. While preparing the return, CPA determined that
Applicants were likely using an improper method of accounting under § 263A.
Subsequently, CPA was engaged to prepare a Form 3115 to change Applicants’
method of accounting under § 263A using the automatic consent procedures of Rev.
Proc. 2015-13 and Rev. Proc. 2022-14, 2022-7 I.R.B. 502.

Taxpayer timely filed Form 7004, Application for Automatic Extension of Time to File
Certain Business Income Tax, Information, and Other Returns, which provided
Taxpayer an extension until Date A to file its consolidated return for Year 1.

In completing its duties, CPA electronically filed Taxpayer’s Form 1120, with the Form
3115 attached, and mailed the duplicate copy of Form 3115 on Date A. See section
6.03(1)(a)(i) of Rev. Proc. 2015-13. The consolidated return was filed on a basis
consistent with Applicants’ method changes having been properly implemented.
However, on Date B, CPA determined that the duplicate copy of Form 3115 had been
inadvertently sent to one of Taxpayer’s operating locations, rather than the appropriate
IRS Service Center. See section 6.03(1)(a)(i)(B) of Rev. Proc. 2015-13. CPA mailed
the duplicate copy of Form 3115 to the appropriate IRS Service Center on Date B. CPA
subsequently submitted this request for an extension of time to file the duplicate copy of
Taxpayer’s Form 3115.

                                RULING REQUESTED

Taxpayer requests an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 to
file the duplicate copy of the Form 3115 required by Rev. Proc. 2015-13 in order to
change Applicants’ method under § 263A.

                                 LAW AND ANALYSIS

Rev. Proc. 2015-13 provides the procedures by which a taxpayer may obtain automatic
consent to change certain accounting methods. A taxpayer complying with all the
applicable provisions of this revenue procedure has obtained the consent of the
Commissioner to change its method of accounting under § 446(e) and the Income Tax
Regulations thereunder.

Section 6.03(1)(a)(i) of Rev. Proc. 2015-13 provides that a taxpayer changing an
accounting method pursuant to 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

PLR-114429-23                                 3

extensions) original federal income tax return for the year of change, and a copy (with
signature) of the Form 3115 must be filed with the appropriate office of the Internal
Revenue Service no earlier than the first day of the year of change and no later than
when the original is filed with the federal income tax return for the year of change.

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a
reasonable extension of time under 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 standard 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.

                                     CONCLUSION

Based solely on the representations submitted, this office concludes that the
requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied in this case.
Accordingly, Taxpayer is granted 45 calendar days from the date of this letter to file the
required duplicate copy of the Form 3115 (identical to the original copy already filed with
the Service) changing Applicants’ method of accounting under § 263A for Year 1.
Please attach a copy of this letter ruling to the duplicate copy.

Except as expressly set forth above, this office neither expresses nor implies any
opinion concerning the tax consequences of the facts described above under any other
provision of the Code or regulations. Specifically, we have no opinion, either expressed
or implied, concerning whether the accounting method change Taxpayer has attempted
to make on behalf of Applicants is eligible to be made under the automatic consent
procedures of Rev. Proc. 2015-13 and Rev. Proc. 2022-14, or whether Taxpayer
otherwise meets the requirements of Rev. Proc. 2015-13 to make accounting method
changes using Rev. Proc. 2015-13. Further, we express no opinion regarding the
propriety of Applicants’ proposed methods of accounting under § 263A.

The ruling contained in this letter ruling is based upon facts and representations
submitted by CPA on behalf of itself, Taxpayer, and Applicants, with accompanying
penalties of perjury statements executed by appropriate parties. 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 Form 3115, all material is subject to verification on examination.

PLR-114429-23                                          4

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

In accordance with the power of attorney on file with our office, we will send a copy of
this letter to each of Taxpayer’s authorized representatives.


                                                Sincerely,



                                                ANNA W. GLEYSTEEN
                                                Senior Counsel, Branch 6
                                                (Income Tax & Accounting)

Enc.: Copy for § 6110 purposes

cc: ----------------------------------------
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