Partnership receives 45 days to file its original accounting-method form

Plain-English summary

A partnership affiliated with a corporation in the IRS Compliance Assurance Process sought an automatic accounting-method change under section 446(e). It timely filed the duplicate copy of Form 3115 but delayed filing the original with its return while discussing the proposed method with the IRS agent. The partnership then requested extra time to complete the required filing. The IRS found that it acted reasonably and in good faith and that relief would not prejudice the government. It granted 45 calendar days to file an original Form 3115 identical to the duplicate, while expressing no view on whether the proposed accounting method was proper.

Ruling snapshot

• Question: May the partnership file the original Form 3115 after the deadline for its automatic accounting-method change?
• Outcome: Approved, with 45 calendar days to file the original form
• Key authorities: IRC § 446(e); Treas. Reg. §§ 301.9100-1, 301.9100-3; Rev. Proc. 2015-13

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202447010 [Third Party Communication:
Release Date: 11/22/2024 Date of Communication: Month DD, YYYY]
Index Number: 9100.00-00, 9100.10-00,
9100.10-01 Person To Contact:
--------------------------, ID No. ----------
-------------------------- Telephone Number:
------------------ --------------------
------------------------------------ Refer Reply To:
CC:ITA:B06
----------------------------------- PLR-103722-24
Date:
August 19, 2024

LEGEND

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

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

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

Parent = -----------------------------------------------------

Taxable Year = -------

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

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 original Form 3115, Application for
Change in Accounting Method, for Taxable Year. 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.

The information submitted indicates that Taxpayer is a “captive partnership” of Parent.
Parent is a corporation and has participated in the Compliance Assurance Process (the
“CAP”) for several years. Taxpayer wished to make a change in method of accounting
under § 446(e) of the Internal Revenue Code using the automatic change procedures of
PLR-103722-24 2

Rev. Proc. 2015-13 for Taxable Year. Taxpayer timely filed the duplicate copy of the
Form 3115 on Date B. But in an effort to maintain transparent and cooperative
interaction between Parent, itself, and the Internal Revenue Service, after discussions
with the Service’s agent, Taxpayer did not timely file the original Form 3115. Taxpayer
and the agent were discussing the appropriateness of the proposed accounting method.

                               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.

IRM 4.51.8.3.1(4) provides that the CAP is based on the transparent and cooperative
interaction between the taxpayer and the Service, and a taxpayer that does not exhibit
this type of behavior is not suitable for the CAP.

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
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 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.
PLR-103722-24 3

                                          CONCLUSION

The information submitted by Taxpayer demonstrates to the satisfaction of the
Commissioner that it had acted reasonably and in good faith, and that granting an
extension of time to make the desired regulatory election would not prejudice the
interests of the Government. Accordingly, Taxpayer is granted 45 calendar days from
the date of this letter to file the original Form 3115 (identical to the duplicate copy
already filed with the Service). Please attach a copy of this letter ruling to the amended
return.

No opinion is expressed or implied as to the application of any other provisions of the
Code or the regulations that may be applicable to the transaction. In particular, we
express no opinion regarding the propriety, or the application of the proposed method
described in Taxpayer’s Form 3115. It should be understood that this ruling only
permits Taxpayer to file the regulatory election at issue for Taxable Year.

The ruling contained in this letter ruling is based upon facts and representations
submitted by Taxpayer, with accompanying penalty 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 regulatory election, all material
is subject to verification on examination.

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

In accordance with the power of attorney on file with the Service, we are sending a copy
of this letter to Taxpayer's authorized representatives.

                                           Sincerely,



                                           Cheryl L. Oseekey
                                           Senior Counsel, Branch 6
                                           (Income Tax & Accounting)

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