Corporation received 45 days to file a late tax-year change request

Plain-English summary

A domestic corporation had used an S corporation tax year until a foreign corporation acquired all of its stock, terminating the S election. The new shareholder signed Form 1128 to change the corporation's year end, and the corporation timely filed a short-period Form 1120 using the proposed year end. An administrative error caused the signed Form 1128 to be mailed late, but the IRS received it within 90 days after its due date. The IRS found that the corporation acted reasonably and in good faith and that relief would not prejudice the government. It granted 45 days to file Form 1128 under Revenue Procedure 2002-39, without ruling that the requested tax-year change itself would be approved.

Ruling snapshot

• Question: Could the corporation receive extra time to file Form 1128 for a change in its annual accounting period?
• Outcome: approved, with 45 days to file
• Key authorities: Treas. Reg. §§ 301.9100-1, 301.9100-3; Rev. Proc. 2002-39

Full text (IRS public release)

 Internal Revenue Service                                Department of the Treasury
                                                         Washington, DC 20224


 Number: 202419014                                       Third Party Communication: None
 Release Date: 5/10/2024                                 Date of Communication: Not Applicable
 Index Number: 9100.00-00
                                                         Person To Contact:
                                                         -----------------------, ID No. -----------------
 -----------------------------------------------         Telephone Number:
 -------------------------                               --------------------
 ----------------------------                            Refer Reply To:
 ---------------------------------------                 CC:ITA:B08
                                                         PLR-119893-23
                                                         Date:
                                                         February 14, 2024




                                                   LEGEND

                            Taxpayer                 =   ---------------------------------------------------
                                                         ------------------------
                            Date 1                   =   --------------------------
                            Date 2                   =   -------------------
                            Date 3                   =   ---------------------------------------------------
                            Date 4                   =   ---------------------------------------------------
                            Date 5                   =   ---------------------------
                            Year                     =   ---------------------------------------------------
                            Current Year End         =   ---------------------------------------------------
                            Proposed Year End        =   -------------------



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

This ruling responds to Taxpayer’s request for a letter ruling dated Date 1. Specifically,
Taxpayer requests an extension of time under section 301.9100-3 of the Income Tax
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 Current Year End to a taxable year ending Proposed Year
End, effective Year.

PLR-119893-23                                2

                                         FACTS

According to the affidavits and additional information provided to us, Taxpayer has
represented that the facts are as follows. Taxpayer is a domestic corporation and uses
the accrual method of accounting. Taxpayer had previously filed federal income tax
returns as an S Corporation. On Date 2, 100% of its stock was purchased from the sole
shareholder by a foreign corporation, and consequently, the S election was immediately
terminated. A final 1120S was filed through this date.

The new shareholder filed Form 1128 to change the year end from Current Year End to
Proposed Year End. A timely filed Form 1120 was filed for the short year Date 4 to
Date 5. The Form 1128 was signed on Date 3, but due to an administrative error by the
taxpayer, it was not mailed on a timely basis. Once the error was discovered, Taxpayer
mailed Form 1128 immediately and it was received prior to 90 days after the required
due date.


                                 LAW AND ANALYSIS

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.

Sections 301.9100-1 through 301.9100-3 provide the standards that the Commissioner
will use to determine whether to grant an extension of time to make a regulatory
election. Section 301.9100-3(a) provides that requests for extensions of time for
regulatory elections (other than automatic extensions covered in section 301.9100-2)
will be granted when the taxpayer provides evidence (including affidavits) to establish
that the taxpayer acted reasonably and in good faith and the grant of relief will not
prejudice the interests of the government.

Section 301.9100-3(c)(3) provides that the interests of the government are deemed to
be prejudiced except in unusual and compelling circumstances if an election is an
accounting period regulatory election (other than the election to use the required taxable
year under section 444) and the request for relief is filed more than 90 days after the
due date for filing the Form 1128.

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 Proposed Year End, effective

PLR-119893-23                                  3

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.

Please note that a user fee is required for an application filed under Rev. Proc. 2002-39.
The user fee is outlined in Rev. Proc. 2024-1, 2024-1 I.R.B. 1.

This ruling is based upon facts and representations submitted by Taxpayer and
accompanied by 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 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) of the Code
provides that it may not be used or cited as precedent.

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



                                           Sincerely,




                                           Erika C. Reigle
                                           Senior Technician Reviewer, Branch 8
                                           Office of Associate Chief Counsel
                                           (Income Tax and Accounting)


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