Part I-General Information
Name
If the application is filed for a husband and wife who file a joint
income tax return, the names of both should appear in the heading.
Identification Number
Individuals enter their social security number (SSN) in this block.
If the application is for a husband and wife who file a joint return,
enter both SSNs. However, if one or both are engaged in a trade or
business, enter the employer identification number (EIN) instead of
the SSNs.
All other applicants enter their EIN in this block.
If the applicant does not have an EIN or SSN, it should apply for
one on Form SS-4 Application For Employer Identification
Number or Form SS-5 Application for a Social Security Card.
Form SS-4 can be obtained at Social Security Administration (SSA)
offices or by calling 1-800-TAX-Form. Form SS-5 can be obtained at SSA
offices or by calling the SSA at 1-800-772-1213. If the applicant has
not received its EIN or SSN by the time the application is due, write
Applied for in the space for the EIN/SSN . See Pub.
583, Starting a Business and Keeping Records.
Address
Include the suite, room, or other unit number after the street
address.
If the Post Office does not deliver mail to the street address and
the applicant has a P.O. box, show the box number instead.
Person To Contact
The person to contact must be the person authorized to sign the
Form 1128, or the applicant's authorized representative. If the person
to contact is an agent for the applicant, attach a power of attorney
to the application. For this purpose, use Form 2848, Power
of Attorney and Declaration of Representative.
Line 1.
Check all applicable boxes to indicate the type of entity filing
this application. For example, an entity that is a domestic
corporation may also be a regulated investment company (RIC). That
entity would check both the Domestic corporation box and the
Other box, and write, RIC under sec. 851 on the dotted
line.
Lines 2a and 2b.
A 52-53-week tax year must end on the date a specified day of the
week last occurs in a particular month or on the date that day of the
week occurs nearest to the last day of a particular calendar month. If
the requested year is a 52-53-week tax year, describe the year (e.g.,
last Saturday in December or Saturday nearest to December 31).
Line 2c.
The required short period return must begin on the day following
the close of the old tax year and end on the day before the first day
of the new tax year. In its first year, the tax year generally starts
when business operations begin.
A corporation's tax year begins at the earliest of the following:
- The date it first has shareholders,
- The date it first has assets, or
- The date it first begins doing business. The initial year
ends on the day before the first day of the new tax year.
Line 8.
Applicants filing Form 1128 to request an expeditious approval for
a change in tax year under Rev. Procs. 2000-11, 87-32, 66-50, 85-58,
or 76-10 are not required to pay a user fee when
Form 1128 is filed on time.
Applicants filing Form 1128 to request a letter ruling on a change
in tax year under Rev. Proc. 2000-1 must pay a $600 user fee. A
request for an exempt organization letter ruling on a change in tax
year under Rev. Proc. 2000-8, 2000-1 I.R.B. 230, requires payment of a
$140 user fee.
A separate $700 user fee is also required for applicants filing a
letter ruling request for an extension of time to file under
Regulations section 301.9100-3 (including requests under Rev. Procs.
2000-11, 87-32, and 66-50).
Note:
The user fees referred to in the above paragraphs are published in
Rev. Proc. 2000-1 (exempt organizations, see Rev. Proc. 2000-8), or an
annual update. These amounts are subject to change annually. See Rev.
Proc. 2000-1 or 2000-8 or annual update for the latest listings of
user fees.
The annual updates are published as Revenue Procedures in the
Internal Revenue Bulletin. The Internal Revenue Bulletins can be found
on the IRS web page, www.irs.gov, under the heading Tax Information
for Business.
Payment of the user fee (check or money order made payable to the
United States Treasury) must be sent with Form 1128 at the time the
form is filed. See Rev. Proc. 2000-1 for more information.
Part II-Expeditious Approval Request
Note:
A user fee is not required if Form 1128 is filed under any of the
revenue procedures listed below.
Complete Part II if the applicant can use the expeditious or
automatic approval rules under one of the revenue procedures listed
below and the application is filed on time.
If the applicant does not qualify for expeditious approval, a
ruling must be requested. See Part III for more information.
If the Service Center denies approval because Form 1128 was not
filed on time, the applicant may want to request relief under
Regulations section 301.9100-3, discussed earlier under Late
Applications on page 2, by completing Part III, as discussed on
page 4, and sending Form 1128 to the National Office for
consideration.
Rev. Proc. 2000-11
Generally, this revenue procedure applies to a corporation,
including a homeowners association, requesting consent to change its
annual accounting period. The common parent of a consolidated group
may change the group's annual accounting period under this revenue
procedure if every member of the consolidated group meets all the
requirements and complies with all the conditions of this revenue
procedure.
This revenue procedure also applies to a corporation (including
members of consolidated groups) that wants to change from a 52-53-week
tax year to a tax year that ends with reference to the same month, and
vice versa, and a CFC (as defined in section 957) that wants to revoke
its one-month deferral election (section 898(c)(1)(B)) and change its
tax year to the tax year of the majority U.S. shareholder year (as
defined in section 898(c)(1)(C))
This revenue procedure does not apply to a corporation
that:
- Has changed its annual accounting period at any time within
the 6 calendar years ending with the calendar year that includes the
beginning of the short period required to effect the change. For this
purpose, the following changes will not be considered a change in
annual accounting period:
- A change in accounting period by a subsidiary to its common
parent's taxable year in order to comply with the common tax year
requirement of Regulations section 1.1502-76(a)(1). See Regulations
section 1.442-1;
- Any prior change in accounting period by a majority-owned,
newly acquired subsidiary that wants to change to the tax year of its
domestic or foreign parent with which it does not file consolidated
tax returns in order to file consolidated financial statements,
provided the change is made within 12 months of the acquisition. For
purposes of this subsection, majority-owned means ownership
that satisfies the test of section 1504(a)(2), substituting more
than 50 percent for at least 80 percent;
- A change from a 52-53-week tax year to a tax year that ends
with reference to the same month, and vice versa;
- Is a member of a partnership or a beneficiary of a trust or
an estate (collectively referred to as pass-through entities)
as of the end of the short period. However, an interest in a
pass-through entity will be disregarded for this purpose if any of the
following conditions are met:
- The partnership in which the corporation is a majority
interest partner (i.e., a partner having an interest in the
partnership's profits and capital of more than 50 percent) would be
required to change its tax year pursuant to section 706(b) to the new
tax year of the corporation. See section 5.08 of this revenue
procedure for a special term and condition related to this
exception;
- The new tax year of the corporation would result in no
change in or less deferral (as described in Temporary Regulations
section 1.706-1T(a)(2)) from the pass-through entity than the present
tax year of the corporation. If the pass-through entity is a
partnership, the corporation should compare the existing deferral
period (between the partnership's and the corporation's current tax
years) with the new deferral period (between the tax year of the
partnership that would be required under section 706 and the
corporation's new tax year). See section 4.04 of Rev. Proc.
2000-11 for an example of this rule; or
- For pass-through entities not qualifying for the exceptions
in either section 4.02(a) or 4.02(b) of Rev. Proc. 2000-11, the
pass-through entity in which the corporation has an interest has been
in existence for at least 3 tax years and the interest is de minimis.
For this purpose, an interest in a pass-through entity is de minimis
only if:
- For each of the prior 3 tax years of the corporation, the
amount of income (including ordinary income or loss, capital gains or
losses, rents, royalties, interest, or dividends) from such
pass-through entity is less than or equal to (A) 5 percent
of the corporation's gross receipts (or, in the case of a member of a
consolidated group, the consolidated group's gross receipts) for those
tax years, and (B) $500,000; and
- The amount of income from all such pass-through entities in
the aggregate is less than or equal to the amounts described in (A)
and (B) above. See section 4.04 of Rev. Proc. 2000-11 for an example
of this rule;
- Is a shareholder of a FSC or IC-DISC, as of the end of the
short period. However, an interest in a FSC or IC-DISC is disregarded
if either of the following conditions is met:
- The FSC or IC-DISC in which the corporation is the principal
shareholder (i.e., the shareholder with the highest percentage of
voting power as defined in section 441(h)) would be required to change
its tax year pursuant to Temporary Regulations section 1.921-1T(b)(4)
and (b)(6) to the new tax year of the corporation. See section 5.08 of
Rev. Proc. 2000-11 for a special term and condition related to this
exception; or
- The new tax year of the corporation would result in no
change in or less deferral of income (as determined under the
principals of Temporary Regulation section 1.706-1T (a)(2)) from the
FSC or IC-DISC than the present tax year of the corporation;
- Is a FSC or an IC-DISC. See Temporary Regulations section
1.921-1T(b)(4) for rules regarding automatic changes of the annual
accounting period of a FSC or IC-DISC to the tax year of its principal
shareholder;
- Is an S corporation (as defined in Regulations section
1361). See Rev. Proc. 87-32 for procedures to follow for certain
automatic changes in the annual accounting period of an S
corporation;
- Attempts to make an S corporation election for the tax year
immediately following the short period, unless the change is to a
permitted S corporation year. For this purpose, a permitted S
corporation year includes a calendar year, a tax year permitted
under section 444, or an ownership tax year or natural business year
(as defined in Rev. Proc. 87-32, 1987-2 C.B. 396);
- Is a personal service corporation (as defined in section
441(i)). See Rev. Proc. 87-32 for procedures to follow for certain
automatic changes in the annual accounting period of a personal
service corporation;
- Is a controlled foreign corporation (CFC) (as defined in
section 957) or a foreign personal holding company (FPHC) (as defined
in section 552);
- Is a shareholder of a CFC or FPHC. However, an interest in a
CFC or FPHC is disregarded if the shareholder is the majority U.S.
shareholder (i.e., the shareholder that meets the ownership
requirement of section 898(b)(2)(A)) and the CFC or FPHC would be
required to change its tax year to the new tax year of the
shareholder. See section 5.08 of Rev. Proc. 2000-11 for a special
term and condition related to this exception;
- Is a tax-exempt organization, other than an organization
exempt from federal income tax under section 521, 526, 527, or 528.
See Rev. Proc. 85-58, 1985-2 C.B. 740, for procedures to follow in
changing an annual accounting period for a tax-exempt organization not
meeting the scope of this revenue procedure.
- Is a direct or indirect shareholder of a passive foreign
investment company (PFIC) that is a qualified electing fund (within
the meaning of section 1295) with respect to be the
shareholder;
- Is a PFIC that U.S. persons (who own directly or indirectly,
in the aggregate, 10 percent or more of the company) elected under
section 1295 to be treated as a qualified electing fund;
- Is a corporation which has in effect an election under
section 936; or
- Is a cooperative association (within the meaning of section
1381(a)) with a loss in the short period required to effect the change
of annual accounting period, unless all the patrons of the cooperative
association are substantially the same in the year before the change
of annual accounting period, in the short period required to effect
the change, and in the year following the change. For purposes of this
subsection, substantially the same means that ownership of more
than 90 percent of the cooperative association's stock is owned by the
same members.
Rev. Proc. 87-32
A partnership, S corporation, or PSC may be able to change or
retain its tax year by following Rev. Proc. 87-32. Under section
4.01(1) of the procedure, the entity determines its natural business
year. The entity must attach to Form 1128 a statement showing the
amount of gross receipts for the most recent 47 months as required by
section 4.03(3) of the revenue procedure. Section 4.01(2) provides
expeditious approval for an S corporation to adopt, change to, or
retain a tax year that coincides with the tax year used by the
shareholders. The representations (Form 1128, Part II, line 2)
highlight the requests provided for in section 4 of the revenue
procedure.
Note:
Generally, to retain its tax year, the entity must have a valid
section 444 election in effect.
Rev. Proc. 66-50
Use this procedure if:
- The entity is an individual changing from a fiscal year to a
calendar year;
- Income is received only from wages, salaries, interest,
dividends, capital gains, pensions, annuities, rents, or royalties;
and
- All the rules of Rev. Proc. 66-50 are met.
Rev. Proc. 85-58 or 76-10
Use either procedure if the entity is a tax-exempt organization
requesting a change under the simplified method of Rev. Proc. 85-58 or
Rev. Proc. 76-10.
Under Rev. Proc. 85-58, an organization exempt under section 501(a)
does not have to file Form 1128 unless:
- The organization was required to file an annual information
return or Form 990-T, at any time during the last 10 calendar years,
and
- The organization has changed its tax year at any time within
the last 10 calendar years ending with the calendar year that includes
the beginning of the short period resulting from the change of tax
year.
An organization described in section 501(c) or (d) is exempt from
tax under section 501(a) unless the exemption is denied under section
502 or 503.
Rev. Proc. 85-58 does not apply to:
- Farmers' cooperatives exempt from Federal income tax under
section 521,
- Organizations described in sections 526, 527, and
528,
- Organizations described in section 401(a), and
- Organizations requesting a change in a tax year on a group
basis.
A central organization should follow Rev. Proc. 76-10 to apply for
a group change in tax year for all its subordinate organizations.
Rev. Proc. 76-10 does not apply to:
- Farmers' cooperatives exempt from Federal income tax under
section 521,
- Certain organizations that have unrelated business taxable
income defined in section 512(a), and
- Organizations that are private foundations defined in
section 509(a).
Part III-Ruling Request
Do not file a tax return using the requested tax year until this
application is approved.
Complete Part III if the applicant cannot file under the
expeditious approval rules listed in Part II on page 3 or if the
application is late.
Rev. Rul. 87-57.
If a partnership, S corporation, or PSC wants to adopt, change, or
retain a tax year by establishing a business purpose but cannot
qualify for the expeditious approval rules, refer to Rev. Rul. 87-57,
1987-2 C.B. 117. The ruling discusses various facts and circumstances
in which the taxpayer may or may not establish a business purpose for
using a tax year.
Section 444 election.
If approval is requested to use a particular tax year based on a
business purpose, a partnership, S corporation, or PSC, if otherwise
qualified, may file a backup section 444 election. If the business
purpose request is later denied, the partnership, S corporation, or
PSC, if otherwise qualified, will be required to activate the backup
section 444 election. The election is made on Form 8716. See Temporary
Regulations section 1.444-3T for additional information.
Section A - General Information
All applicants must complete Section A to request a ruling on an
adoption, change to, or retention of a tax year.
Line 1a.
For purposes of line 1a the following are not considered
changes in tax years:
- Any prior change in accounting period by a majority-owned,
newly acquired subsidiary that wants to change to the tax year of its
domestic or foreign parent with which it does not file consolidated
tax returns in order to file consolidated financial statements,
provided the change is made within 12 months of the acquisition. For
purposes of this subsection, majority-owned means ownership
that satisfies the test of section 1504(a)(2), substituting more
than 50 percent for at least 80 percent;
- A change from a 52-53-week tax year to a tax year that ends
with reference to the same month, and vice versa.
- A subsidiary that is required to change its tax year in
order to adopt the common parent's annual tax year for the first
consolidated return year for which the subsidiary's income is
includible in the consolidated return under Regulations section
1.1502-76(a).
Line 7.
If the applicant is requesting a ruling based on its natural
business year discussed in Rev. Proc. 87-32 (for partnerships, S
corporations, or PSCs) or in Rev. Proc. 74-33, 1974-2 C.B. 489 (for
all other applicants), attach to Form 1128 a statement that sets forth
the gross receipts referred to in section 4.03(3) of Rev. Proc. 87-32
or the gross receipts and inventory costs referred to in section 4 of
Rev. Proc. 74-33.
Section B - Corporations (other than S corporations and controlled foreign corporations)
Corporations must complete Section B and any other section that
applies to that particular entity. For example, a PFIC completes
Section B and attaches the statement required by Section H. Complete
Sections B and F for a tax-exempt organization that is a corporation.
Section C - S Corporations
An S corporation must have a permitted tax year unless it has
elected under section 444 to have a tax year other than the required
tax year. A permitted tax year is:
- A tax year that ends on December 31, or
- Any other tax year if the corporation can establish a
business purpose to the satisfaction of the IRS.
For purposes of 2, any deferral of income to
shareholders will not be treated as a business purpose. For more
information, see Rev. Proc. 87-32 and Rev. Rul. 87-57.
If any shareholder is applying for a corresponding change in tax
year, that shareholder must file a separate Form 1128 to get advance
approval to change its tax year.
Section D - Partnerships
A partnership must obtain advance approval from the IRS to adopt,
change, or retain a tax year unless it is not required to file Form
1128, or it meets one of the expeditious approval rules discussed in
Part II on page 3. See Who Does Not File on page 1.
Partners must also get separate advance approval to
change their tax years.
Line 1.
Enter the first date a business transaction resulted in a tax
consequence, such as receiving income or incurring an expense.
Section E - Controlled Foreign Corporations
A CFC, in general, must obtain advance approval from the IRS to
change a tax year unless the CFC is permitted to change its tax year
in accordance with Rev. Proc. 90-26 or Notice 95-13 (see instruction
under Who Does Not File on page 1). A CFC that is revoking
its 1-month deferral election that was made under section 898(c)(1)(C)
must obtain prior approval from the IRS by completing Parts I and III
of Form 1128.
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