SECTION 6. GENERAL

APPLICATION PROCEDURES

.01 What to File .

(1) Application . To request the Commissioner’s approval to adopt, change, or retain an annual accounting period under this revenue procedure, a taxpayer (other than an electing S corporation) must complete, sign, and file a

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current Form 1128, Application to Adopt, Change, or Retain a Tax Year. An electing S corporation requesting to adopt, change, or retain an annual accounting period must complete the appropriate section of, and sign and file, a current Form 2553, Election by a Small Business Cor- poration.

(2) Signature requirement . The application must be signed by the taxpayer or on behalf of the taxpayer requesting the adoption, change, or retention of annual accounting period by an individual with authority to bind the taxpayer in such matters. For example, an officer must sign on behalf of a corporation, a general partner on behalf of a state law partnership, a member-manager on behalf of a limited liability company, a trustee on behalf of a trust, or an individual taxpayer on behalf of a sole proprietorship. If the taxpayer is a member of a consolidated group, a Form 1128 submitted on behalf of the taxpayer must be signed by a duly authorized officer of the common parent. If an agent is authorized to represent the taxpayer before the Service, receive the original or a copy of the correspondence concerning the request, or perform any other act(s) regarding the application filed on behalf of the taxpayer, a power of attorney reflecting such authorization(s) must be attached to the application. A taxpayer’s representative without a power of attorney to represent the taxpayer as indicated in this section will not be given any information regarding the application.

(3) Additional information regard- ing prior applications .

(a) Accounting period changed . If a taxpayer changed its annual accounting period at any time within the most recent 48-month period ending with the last month of the requested taxable year (under either an automatic change procedure or a procedure requiring prior approval), a copy of the application for the previous change, the ruling letter, and any other related correspondence from the Service must be attached to the application filed for the requested taxable year.

(b) Accounting period not changed . If a prior application (filed under either an automatic change procedure or a procedure requiring prior approval) was withdrawn, not perfected, or denied, or if the change in annual

accounting period was not made, and the taxpayer files another application to change its annual accounting period within the most recent 48-month period ending with the last month of the requested taxable year, a copy of the earlier application, together with any related correspondence from the Service, must be attached to the application filed for the requested taxable year. An explanation must be furnished stating why the earlier application was withdrawn or not perfected or why the change in annual accounting period was not made. The Service will consider the explanation in determining whether the subsequent request for a change in the taxpayer’s annual accounting period will be granted.

(4) Additional information for sec- tion 5.03(1) and (2) . If the taxpayer requests to establish a natural business year under section 5.03(1) or (2) of this revenue procedure, it must provide its gross receipts from sales or services and approximate inventory costs (where applicable) for each month in the requested short period and for each month of the three immediately preceding taxable years.

(5) Additional information for sec- tion 5.03(3) . In the case of a taxpayer requesting to change to a natural business year that satisfies the 25-percent gross receipts test described in section 5.03(3) of this revenue procedure, the taxpayer must supply the gross receipts for the most recent 47 months for itself (or any predecessor) in compliance with the instructions to Form 1128.

(6) Additional information for sec- tion 5.04 . The taxpayer must indicate whether it has an NOL or CL in the short period required to effect the change and provide the type and amount of any credits generated in the short period.

(7) Additional information for sec- tion 5.05 . If a taxpayer requests to change an annual accounting period and establishes a business purpose under section 5.02(2) of this revenue procedure, the taxpayer must provide the following additional information necessary to determine whether a substantial distortion of income (within the meaning of section 5.05(1)) exists and, thus, whether the additional terms, conditions, and adjustments of section 5.05 apply:

(1) In general . Except as provided in section 6.02(2) of this revenue procedure, a taxpayer must file a Form 1128 no earlier than the day following the end of the first effective year and no later than the due date (not including extensions) of the federal income tax return for the first effective year. However, the Service recommends that the Form 1128 be filed as early as possible to provide the Service adequate time to respond to the request prior to the due date (including extensions) of the taxpayer’s federal income tax return for the first effective year. In the case of a change that results in a short period of six days or less, the Form 1128 also must be filed no earlier than the day following the end of the short period and no later than the due date (not including extensions) of the federal income tax return for the short period, even though the short period is not treated as a separate taxable year under § 1.441–2(b)(2). A taxpayer that fails to file a Form 1128

(a) if the taxpayer has an interest in a pass-through entity:

(i) reasonable estimates of the taxpayer’s taxable income for its current taxable year (computed as if the taxpayer remained on its existing taxable year);

(ii) a comparison of the existing deferral period of any pass-through entity in which the taxpayer has a direct or, as appropriate, indirect interest ( i.e., the period between the pass-through entity’s and the taxpayer’s current taxable years) with the proposed deferral period for such pass-through entity ( i.e., the period between the taxable year of the passthrough entity that would be required after the requested change and the taxpayer’s requested taxable year); and

(iii) reasonable estimates of the aggregate deferral of income from all pass-through entities described in section 5.05(1)(a); (b) the amount of any NOL, CL, or credit carried over to the first effective year and the taxable year in which such NOL, CL, or credit was generated; and

(c) identification of any partnership, specified foreign corporation (as defined in § 898), foreign sales corporation (as defined in former § 922), or domestic international sales corporation (as defined in § 992) in which the taxpayer has a majority interest.

.02 When to File .

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within the time period prescribed in this section 6.02(1) may request an extension of time to file under § 301.9100 of the Procedure and Administration Regulations. Under § 301.9100–3, a Form 1128 filed within 90 days after the time period prescribed in this section 6.02(1) may be considered as timely filed if the taxpayer establishes that the taxpayer acted reasonably and in good faith and that granting relief will not prejudice the interests of the government. If a Form 1128 is filed more than 90 days after this period, prejudice to the interests of the government will be presumed and such requests will be approved only in unusual and compelling circumstances. See § 301.9100– 3(c)(3). (2) Electing S corporations . An electing S corporation must file a Form 2553 when the election to be an S corporation is filed pursuant to § 1362(b) and § 1.1362–6. Generally, such election must be filed at any time during (a) the taxable year that immediately precedes the taxable year for which the election is to be effective or (b) the taxable year for which the election is to be effective, provided the election is made before the 16th day of the third month of the taxable year.

consents to the change or retention. The director will consent to the change or retention unless in the opinion of the director, such entity’s annual accounting period ordinarily would be included as an item of adjustment in the year(s) for which the entity is under examination. For example, the director will consent to a change where the entity is using a permissible annual accounting period. The director also will consent to a change from an impermissible annual accounting period where the period became impermissible ( e.g., due to a change in ownership or a change in the entity’s business) subsequent to the years under examination. The question of whether the annual accounting period from which the entity is changing is permissible or became impermissible subsequent to the years under examination may be referred to the national office as a request for technical advice under the provisions of Rev. Proc. 2002–2 (or any successor) or, for taxexempt organizations, Rev. Proc. 2002–5 (or any successor).

(b) A partnership, S corporation, electing S corporation, or PSC changing or retaining an annual accounting period under this revenue procedure with the consent of the appropriate director must attach to the application a statement from the director consenting to the change or retention. The partnership, S corporation, electing S corporation, or PSC must provide a copy of the application to the director at the same time it files the application with the national office. The application must contain the name(s) and telephone number(s) of the examining agent(s).

(2) Certain taxpayers before an area office . A partnership, S corporation, electing S corporation, or PSC that is before an area office must attach to the application a separate statement signed by an appropriate person certifying that, to the best of that person’s knowledge, the entity’s annual accounting period is not an issue under consideration by the area office. The entity must provide a copy of the application to the appeals officer at the same time it files the application with the national office. The application must contain the name and telephone number of the appeals officer.

(3) Certain taxpayers before a fed- eral court . A partnership, S corporation,

.03 Where to File .

(1) In general . A taxpayer, other than an electing S corporation or exempt organization, applying for an adoption, change, or retention in annual accounting period pursuant to this revenue procedure must file its Form 1128, together with the appropriate user fee, with the Service at the following address: Internal Revenue Service, Associate Chief Counsel (Income Tax & Accounting), Attention: CC:PA: T:CRU, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044 (or, in the case of a designated private delivery service: Internal Revenue Service, Associate Chief Counsel (Income Tax & Accounting), Attention: CC:PA:T:CRU, Room 6561, 1111 Constitution Avenue, N.W., Washington, DC 20224).

(2) Electing S corporations . An electing S corporation requesting to adopt, change, or retain an annual accounting period pursuant to this revenue procedure must file its Form 2553 with the appropriate Service Center designated in the instructions to the Form 2553. The taxpayer should not include the user fee with the Form 2553 mailed to the

Service Center. The Service Center will send the Form 2553 to the national office of the Service, which will then notify the taxpayer that the fee is due.

(3) Exempt organizations . An exempt organization applying for a change in annual accounting period pursuant to this revenue procedure must file its Form 1128, together with the appropriate user fee, with the Service at the following address: Internal Revenue Service, Attention: T:EO:RA, P.O. Box 27720, McPherson Station, Washington, DC 20038. .04 User Fee . Taxpayers are required to pay user fees for requests to adopt, change, or retain an annual accounting period under this revenue procedure. Rev. Proc. 2002–1 and, for tax-exempt organizations, Rev. Proc. 2002–8, 2002–1 I.R.B. 259 (or any successors) contain the schedule of user fees and provide guidance for complying with the user fee requirements.

.05 Consolidated Groups — Separate Forms 1128 Not Required . A common parent of a consolidated group files a single Form 1128 on behalf of the consolidated group and pays only a single user fee. The common parent must indicate that the Form 1128 is for the common parent and all its subsidiaries and answer all relevant questions on the application for each member of the consolidated group. If one or more of the members of the group is requesting to use a 52–53-week taxable year that ends within the same 7-day period of the other members’ requested taxable year, the parent must attach a statement to its tax return for the first effective year as required by Rev. Proc. 89–56, 1989–2 C.B. 643 (or any successor). The consolidated group must also comply with all of the provisions of Rev. Rul. 72–184, 1972–1 C.B. 289 (or any successor). See § 1.1502– 76(a)(1). .06 Additional Procedures If Under Examination, Before an Area Office, or Before a Federal Court .

(1) Certain taxpayers under exami- nation .

(a) A partnership, S corporation, electing S corporation, or PSC that is under examination may apply for approval to change or retain its annual accounting period under this revenue procedure only if the appropriate director

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electing S corporation, or PSC that is before a federal court must attach to the application a separate statement signed by an appropriate person certifying that, to the best of that person’s knowledge, the entity’s annual accounting period is not an issue under consideration by the federal court. The entity must provide a copy of the application to the government counsel at the same time it files the application with the national office. The application must contain the name and telephone number of the government counsel.