Corporation receives 60 days to complete its accounting-method filing

Plain-English summary

A corporation requested extra time to complete an automatic accounting-method change for certain related-party transactions. Its tax adviser timely faxed a copy of Form 3115 to the IRS, and the corporation reported the change and related section 481(a) adjustment on its timely filed return. Due to administrative oversight, however, the adviser did not attach the original Form 3115 to that return. The IRS found that the requirements for discretionary filing relief were satisfied and gave the corporation 60 days to attach the original form to an amended return. The ruling did not decide whether the corporation was eligible for the automatic change or whether its proposed method was permissible.

Ruling snapshot

• Question: May the corporation file the original Form 3115 after omitting it from its timely filed return?
• Outcome: Approved, with 60 calendar days to file the form with an amended return
• Key authorities: IRC §§ 267, 446(e), 481(a); Treas. Reg. §§ 1.267(a)-3, 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: 202446011 Third Party Communication: None
Release Date: 11/15/2024 Date of Communication: Not Applicable
Index Number: 9100.10-01
Person To Contact:
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Refer Reply To:
CC:INTL:B02
PLR-107746-24
Date:
August 14, 2024

Taxpayer = ----------------------------------------------------------------------
S1 = -----------------------------------------------------------------------
S2 = ------------------------ ---------------------------
S3 = ----------------------------------------------
Tax Advisor = ----------------------------------------
Date 1 = ------------------------
Date 2 = ------------------
Date 3 = ----------------
Date 4 = ----------------------------
Date 5 = ------------------------

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

This letter ruling responds to a letter dated Date 1, and supplemental correspondence,
submitted by Taxpayer on behalf of itself and its subsidiaries S1, S2, and S3. Taxpayer
is requesting an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to make an automatic method change
pursuant to Rev. Proc. 2022-14, 2022-7 I.R.B. 502 by filing a Form 1120X, Amended
U.S. Corporate Income Tax Return, for the taxable year ending Date 2, with an original
Form 3115, Application for Change in Accounting Method, attached.

PLR-107746-24 2

FACTS

On Date 3, Taxpayer, with the assistance of Tax Advisor, faxed a Form 3115,
Application for Change in Accounting Method, to change its method of accounting for
certain related party transactions under § 1.267(a)-3 pursuant to section 9 of Rev. Proc.
2015-13, 2015-5 I.R.B. 419 and section 13.01 of Rev. Proc. 2022-14 for the taxable
year ending Date 2, to the IRS Ogden, Utah office.

On Date 4, Taxpayer timely and electronically filed its Form 1120, U.S. Corporate
Income Tax Return, for the taxable year ending Date 2. On its electronically filed Form
1120, Taxpayer reflected the impact of the automatic method change and reported the
associated adjustment under § 481(a) of the Internal Revenue Code. Due to unusual
circumstances and administrative oversight, Tax Advisor inadvertently failed to attach
the Form 3115 to the electronically filed Form 1120 as required under section
6.03(1)(a)(i)(A) of Rev. Proc. 2015-13.

On Date 5, Tax Advisor discovered the missing Form 3115 and notified Taxpayer.
Taxpayer immediately engaged Tax Advisor to request an extension of time to file the
automatic method change under § 301.9100.

APPLICABLE LAW

Rev. Proc. 2015-13 and Rev. Proc. 2022-14 provide the procedures by which a
taxpayer may obtain automatic consent to change certain 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.

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.

PLR-107746-24 3

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 § 301.9100-3 have been satisfied. Accordingly, Taxpayer is granted 60
calendar days from the date of this letter to file the original of Form 3115 changing
Taxpayer's method of accounting for certain related party transactions pursuant to §
1.267(a)-3 under Rev. Proc. 2015-13 and Rev. Proc. 2022-14, with an amended federal
income tax return for the taxable year ending on Date 2.

Please attach a copy of this letter ruling to the amended return. 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. 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. Specifically, no
opinion is expressed or implied concerning whether: (1) Taxpayer is eligible to file the
Form 3115 at issue under Rev. Proc. 2015-13 and Rev. Proc 2022-14; (2) Taxpayer
otherwise meets the requirements of Rev. Proc. 2015-13 and Rev. Proc. 2022-14; or (3)
Taxpayer's proposed method of accounting described in the Form 3115 is a permissible
method of accounting. Further, this letter ruling does not grant an extension of time for
filing Taxpayer's federal income tax return for the taxable year ending Date 2.

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.

PLR-107746-24 4

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

                                                 Sincerely,

                                                 /s/ Pierce W. Pandolph

                                                 Pierce W. Pandolph
                                                 Senior Technical Reviewer, Branch 2
                                                 Associate Chief Counsel (International)

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