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Rev. Proc. 2002-39 provides the

to the government counsel at the

Rev. Proc. 2007-1 (exempt

general procedures for obtaining

same time it files the application with

organizations, see Rev. Proc.

approval to adopt, change, or retain a

the IRS National Office. The

2007-8), or an annual update. The

tax year for taxpayers not qualifying

application must contain the name

annual updates are published as

under the automatic approval rules or

and telephone number of the

revenue procedures in the Internal

if the application is late.

government counsel.

Revenue Bulletin. The Internal

Revenue Bulletins can be accessed

Line 4a. Attach an explanation of the

Section A—General

at The fees for 2007

legal basis supporting the requested

are in Internal Revenue Bulletin

Information

tax year. Include all authority

2007-1.

(statutes, regulations, etc.) supporting

All applicants must complete this

the requested year. The applicant is

section to request a ruling on an

Payment of the user fee (check or

encouraged to include all relevant

adoption of, change to, or retention of

money order made payable to the

facts and circumstances that may

a tax year.

Internal Revenue Service) must be

establish a business purpose.

attached to Form 1128 at the time the

Line 1. If the applicant is a

Line 4b. If the applicant requests to

form is filed. See Rev. Proc. 2007-1

partnership, S corporation, electing S

establish a natural business year

for more information.

corporation, or PSC and any of the

under the annual business cycle test

following situations apply, the

Section B—Corporations

or seasonal business test of sections

applicable additional procedures

(Other Than S Corporations

5.03(1) and 5.03(2) of Rev. Proc.

described below must be followed.

•

2002-39, it must provide its gross

and Controlled Foreign

The applicant is under examination

receipts from sales or services and

and has obtained the consent of the

Corporations)

approximate inventory costs (where

appropriate director to the change or

Corporations must complete this

applicable) for each month in the

retention of the applicant’s annual

section and any other section in Part

requested short period and for each

accounting period. The applicant

III that applies to that particular entity.

month of the three immediately

must attach to the application a

For example, a PFIC completes

preceding tax years.

statement from the director

Section B and attaches the statement

consenting to the change or retention

If the applicant is requesting to

required by Section H. Complete

of its annual accounting period. The

change to a natural business year

Sections B and F for a tax-exempt

applicant must also provide a copy of

that satisfies the 25-percent gross

organization that is a corporation.

the application to the director at the

receipts test described in section

same time it files the application with

5.03(3) of Rev. Proc. 2002-39, the

Section C—S Corporations

the IRS National Office. The

applicant must supply its gross

An S corporation must have a

application must contain the name(s)

receipts for the most recent 47

permitted tax year unless it has

and telephone number(s) of the

months (or for any predecessor).

elected under section 444 to have a

examination agent(s).

Line 14. Applicants filing to request

•

tax year other than the required tax

The applicant is before an appeals

an automatic approval for a change in

year. A “permitted tax year” is:

(area) office and the applicant’s

tax year under Rev. Procs. 2006-45,

1. A tax year that ends on

annual accounting period is not an

2006-46, 2003-62, 85-58, or 76-10

December 31 or

issue under consideration by the

(Part II) are not required to pay a user

2. Any other tax year if the

appeals (area) office. The applicant

fee when Form 1128 is filed on time.

corporation can establish a business

must attach to the application a

Applicants filing to request a letter

purpose to the satisfaction of the IRS.

separate statement signed by the

ruling on a change in tax year under

appropriate person certifying that, to

Rev. Proc. 2007-1 and Rev. Proc.

For purposes of 2, above, any

the best of that person’s knowledge,

2002-39 must pay a $1,500 user fee.

deferral of income to shareholders

the entity’s annual accounting period

A request for an exempt organization

will not be treated as a business

is not an issue under consideration by

letter ruling on a change in tax year

purpose. For more information, see

the appeals (area) office. The

under Rev. Proc. 2007-8, 2007-1

Rev. Proc. 2006-46.

applicant must also provide a copy of

I.R.B. 230, requires payment of a

the application to the appeals officer

If any shareholder is applying for a

$350 user fee.

at the same time it files the

corresponding change in tax year,

application with the IRS National

You can find Rev. Proc.

that shareholder must file a separate

Office. The application must contain

TIP

2007-1 and Rev. Proc. 2007-8

Form 1128 to get advance approval

the name and telephone number of

on pages 1 and 230,

to change its tax year.

the appeals officer.

respectively, of Internal Revenue

•

The applicant is before a Federal

Section D—Partnerships

Bulletin 2007-1 at

court and the applicant’s annual

irs-irbs/irb07-01.pdf.

A partnership must obtain advance

accounting period is not an issue

approval from the IRS to adopt,

A separate $1,500 user fee is also

under consideration by the Federal

change, or retain a tax year unless it

required for applicants filing a letter

court. The applicant must attach to

is not required to file Form 1128, or it

ruling request for an extension of time

the application a separate statement

meets one of the automatic approval

to file under Regulations section

signed by the appropriate person

rules discussed in Part II, Section B

301.9100-3 (including requests under

certifying that, to the best of that

on page 4. See Exceptions on page

Rev. Procs. 2006-45, 2006-46, and

person’s knowledge, the entity’s

2003-62 (Part II, Sections A, B, and

annual accounting period is not an

C)).

issue under consideration by the

Partners must also get separate

Federal court. The applicant must

Note. The user fees referred to in the

advance approval to change their tax

also provide a copy of the application

above paragraphs are published in

years.

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Instructions For Form 1128 - Application To Adopt, Change, Or Retain A Tax Year - 2007 Page 7

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