Instructions for Form 1128

(Rev. November 2017)

(Use with the October 2014 revision of Form 1128)

Application To Adopt, Change, or Retain a Tax Year

Department of the Treasury

Internal Revenue Service

Section references are to the Internal 

Revenue Code unless otherwise noted.

General Instructions

Future Developments

For the latest information and 

developments related to Form 1128 

and its instructions, such as 

legislation enacted after this form and 

its instructions were published, go to 

IRS.gov/Form1128.

Purpose of Form

File Form 1128 to request a change in 

tax year. Partnerships, S corporations, 

personal service corporations (PSCs), 

or trusts may be required to file Form 

1128 to adopt or retain a certain tax 

year.

Part II is used for an automatic 

approval request. If the applicant does 

not qualify for automatic approval, 

Part III is used for a ruling request.

Who Must File

Generally, taxpayers must file Form 

1128 to adopt, change, or retain a tax 

year. However, see Exceptions, later.

The common parent of a 

consolidated group that files a 

consolidated return files one Form 

1128 for the consolidated group. In 

addition, the common parent 

corporation must (a) indicate that the 

Form 1128 is for the common parent 

corporation and all its subsidiaries 

and (b) answer all relevant questions 

on the application for each member of 

the consolidated group.

If a consolidated group filing a 

consolidated return wants to change 

its tax year by using Rev. Proc. 

2006-45, 2006-45 I.R.B. 851 at 

www.irs.gov/irb/2006-45_IRB/

index.html (or its successor), every 

member of the group must meet the 

revenue procedure requirements.

If a controlled foreign corporation 

(CFC) or 10/50 corporation 

(noncontrolled section 902 

corporation) does not have a U.S. 

trade or business, then the CFC's 

controlling domestic shareholder(s) 

must file Form 1128 on behalf of such 

foreign corporation to change its tax 

year (except as provided above with 

respect to a controlling domestic 

shareholder that is a member of a 

consolidated group). See Regulations 

section 1.964-1(c)(5) for the definition 

of controlling domestic shareholders 

of a CFC or 10/50 corporation.

If Form 1128 is filed on behalf of a 

CFC or 10/50 corporation, each 

controlling domestic shareholder must 

attach to its tax return a copy of the 

form and all other domestic 

shareholders must be provided a 

written notice of the election. See 

Regulations section 1.964-1(c)(3) for 

details.

Exceptions

Do not file Form 1128 in the following 

circumstances.

Corporations

A corporation adopting its first tax 

year.

A corporation required to change its 

tax year to file a consolidated return 

with its new common parent (see 

Regulations sections 1.442-1(c) and 

1.1502-76(a)).

A foreign sales corporation (FSC) 

or an interest charge domestic 

international sales corporation 

(IC-DISC) changing to the tax year of 

the U.S. shareholder with the highest 

percentage of voting power (see 

section 441(h)). Also see Temporary 

Regulations section 1.921-1T(b)(4). 

However, a FSC or IC-DISC must file 

Form 1128 to change its tax year 

concurrently, if a tax year change has 

been made by the U.S. shareholder.

Partnerships, S Corporations, 

and Personal Service 

Corporations

A newly formed partnership 

adopting a required tax year or a 

52-53-week tax year with reference to 

such required tax year.

A partnership, S corporation, or 

PSC terminating its section 444 

election (see Temporary Regulations 

section 1.444-1T(a)(5)).

A newly formed partnership, an 

electing S corporation, or a newly 

formed PSC that elects under section 

444 a tax year other than the required 

tax year by filing Form 8716, Election 

To Have a Tax Year Other Than a 

Required Tax Year.

A corporation electing to be treated 

as an S corporation by filing Form 

2553, Election by a Small Business 

Corporation, and requesting to 

change or retain its tax year.

Exempt Organizations

An organization exempt under section 

501(a) does not file Form 1128 unless 

the organization has changed its tax 

year at any time within a 

10-calendar-year period, and the 

organization has had an annual filing 

requirement during that 10-year 

period (see Rev. Proc. 85-58, 1985-2 

C.B. 740). This exception does not 

apply to organizations exempt from 

tax under section 521, 526, 527, or 

528; organizations described in 

section 401(a); and organizations 

involved in a group change in tax year 

for all its subordinate organizations.

Individuals

Newly married individuals changing to 

the tax year of the other spouse in 

order to file a joint return do not file 

Form 1128. Regulations section 

1.442-1(d) must be followed.

Trusts

A trust (other than a tax-exempt 

trust, charitable trust, or a grantor trust 

under Rev. Rul. 90-55, 1990-2 C.B. 

161) that adopts the calendar year as 

required by section 644.

Certain revocable trusts electing to 

be treated as part of an estate.

An employee plan or trust filing 

Form 5308, Request for Change in 

Plan/Trust Year, to change its plan or 

trust year.

Oct 24, 2017 Cat. No. 61752V
Estates

An estate adopting its first tax year.

When To File

Tax Year Adoption, Change, or 

Retention

To request a ruling to adopt, 

change, or retain a tax year, file Form 

1128 by the due date (not including 

extensions) of the federal income tax 

return for the first effective year. Do 

not file earlier than the day following 

the end of the first effective year. In 

the case of a change in tax year, the 

first effective year is the short period 

required to effect the change.

To request automatic approval to 

change a tax year under Rev. Proc. 

2006-45 (Form 1128, Part II, 

Section A) or Rev. Proc. 2006-46, 

2006-45 I.R.B. 859 at www.irs.gov/irb/

2006-45_IRB/index.html (Form 1128, 

Part II, Section B), file by the due date 

of the return (including extensions) for 

the short period required to effect the 

change. A Form 1128 filed by a 

controlling domestic shareholder (or 

its common parent) on behalf of a 

CFC or 10/50 corporation is due no 

later than the due date (including 

extensions) of that shareholder's (or 

its common parent's) income tax 

return for its tax year with or within 

which ends the first effective year of 

the CFC or 10/50 corporation.

For an individual filing to change to 

a calendar year under Rev. Proc. 

2003-62, 2003-32 I.R.B. 299 at 

www.irs.gov/irb/2003-32_IRB/

index.html (Form 1128, Part II, 

Section C), Form 1128 must be filed 

on or before the due date (including 

extensions) for filing the federal 

income tax return for the short period 

required to effect the change.

To change a tax year under Rev. 

Proc. 85-58 (Form 1128, Part II, 

Section D), file by the 15th day of the 

5th calendar month after the end of 

the short period.

Late Applications

Generally, an application filed after 

the appropriate due date stated above 

is considered late.

However, applications filed within 

90 days after the due date may be 

considered as timely filed when the 

applicant establishes that:

1. The taxpayer acted reasonably 

and in good faith, and

2. Granting relief will not prejudice 

the interests of the government.

Applications that are filed more 

than 90 days after the due date are 

presumed to jeopardize the interests 

of the government, and will be 

approved only in unusual and 

compelling circumstances.

Under either circumstance, an 

extension request must be filed under 

Regulations section 301.9100-3 and 

is a ruling request under Rev. Proc. 

2017-1, I.R.B. 1 at www.irs.gov/irb/

2017-1_IRB/ar07.html (updated 

annually). The extension is also 

subject to public inspection under 

section 6110.

See section 7 of Rev. Proc. 2017-1 

for information on requesting a ruling.

Note. An extension request under 

Rev. Proc. 2017-1 (or its successor) 

requires payment of a user fee.

Early Applications

Generally, an application to adopt or 

change a tax year will not be 

considered if it is submitted before the 

end of the short period.

Where To File

Part II—Automatic Approval 

Request

If Part II (automatic approval request) 

applies to the applicant, file Form 

1128 with:

Internal Revenue Service Center

Attention: Entity Control

Use the address where the applicant's 

income tax return is filed. See the 

instructions for the applicant's income 

tax return. The applicant must also 

attach a copy of Form 1128 to the 

federal income tax return filed for the 

short period required to effect the 

change.

Do not file a request for 

automatic approval with either 

address below in Part 

III—Ruling Request. Doing so will 

result in a significant delay in the 

processing of your request.

CFCs and 10/50 corporations. If 

the form is filed on behalf of a CFC or 

10/50 corporation, the controlling 

domestic shareholder who retains the 

jointly executed consent described in 

Regulations section 1.964-1(c)(3)(ii) 

CAUTION

!

must file Form 1128 with its tax return 

for its tax year with or within which 

ends the first effective year of the CFC 

or the 10/50 corporation. The other 

controlling domestic shareholder(s) 

must attach a copy of the form to its 

income tax return for its tax year with 

or within which ends the tax year of 

the CFC or 10/50 corporation.

Note. If a corporation is required to 

file Form 1128 with its tax return and 

is a member of an affiliated group of 

corporations filing a consolidated 

return, the common parent must file 

the Form 1128 with the consolidated 

return.

Applications prior to an election to 

become an S corporation. If a 

corporation is requesting to change its 

tax year prior to making an election to 

become an S corporation and the 

requested tax year is a permitted tax 

year for S corporations (for example, 

a calendar tax year), file Form 1128 

as an attachment to Form 2553. See 

Form 1128, Part II, line 2. Do not file 

Form 1128 with the above address for 

automatic approval requests. For 

information on where to file Form 

2553, see the Instructions for Form 

2553.

Part III—Ruling Request

If Part III (ruling request) applies to the 

applicant, file Form 1128 and the 

appropriate user fee with the IRS 

National Office. Mail Form 1128 to:

Internal Revenue Service

Associate Chief Counsel (Income 

Tax and Accounting)

Attention: CC:PA:LPD:DRU

P.O. Box 7604

Ben Franklin Station

Washington, DC 20044-7604

The IRS will acknowledge receipt 

of the application within 45 days. You 

can inquire about the status of the 

application by writing to:

Control Clerk, CC:ITA

Internal Revenue Service

Room 4516

1111 Constitution Ave., NW

Washington, DC 20224-0002

The applicant will receive 

notification of its approval or denial. If 

no communication is received from 

the IRS regarding the application 

within 90 days, contact the Control 

Clerk.

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Exempt organizations requesting a 

ruling should send Form 1128 and 

any applicable user fee to:

Internal Revenue Service

1973 N Rulon White Blvd

M/S 6273

Ogden, Utah 84201

You can inquire about the status of 

an application for exempt 

organizations by calling 

877-829-5500.

Who Must Sign

Except as discussed below (regarding 

automatic approval requests filed on 

behalf of a CFC or 10/50 corporation), 

Form 1128 must be signed by the filer 

as discussed below. A valid signature 

by the individual or an officer of the 

organization is required on Form 

1128. If the form does not have a valid 

signature, it will not be considered.

Individuals

If filing a joint return, both spouses 

must sign.

Partnerships

Include the signature, name and title 

of a general partner on behalf of a 

state law partnership, or a 

member-manager on behalf of a 

limited liability company.

Estates

Include the signature, name, and title 

of the fiduciary or other person legally 

authorized to sign.

Trusts

Include the signature, name, and title 

of the fiduciary or other person legally 

authorized to sign.

Tax-Exempt Organizations

Include the signature, name, and title 

of a principal officer or other person 

legally authorized to sign.

CFC or 10/50 Corporation

For a CFC or 10/50 corporation with a 

U.S. trade or business and filing Form 

1128 as the applicant, follow the same 

rules as other corporations (see All 

Other Filers, later). If the form is being 

filed on behalf of a CFC or 10/50 

corporation by its controlling domestic 

shareholder(s), follow the instructions 

below for ruling requests and 

automatic approval requests.

Ruling request. A ruling request 

application that is filed on behalf of a 

CFC or 10/50 corporation must be 

signed by an authorized officer of the 

designated (controlling domestic) 

shareholder that retains the jointly 

executed consent as provided for in 

Regulations section 1.964-1(c)(3)(ii). 

A schedule listing the name(s) and 

identifying number(s) of the controlling 

domestic shareholder(s) must be 

attached to the application. Also, the 

controlling domestic shareholder(s) 

must satisfy the requirements of 

Regulations section 1.964-1(c)(3). If 

the designated (controlling domestic) 

shareholder is a member of a 

consolidated group, then an 

authorized officer of the common 

parent must sign. Do not sign the 

copy of Form 1128 filed with the 

income tax return.

Automatic approval request. An 

automatic ruling request application 

that is filed on behalf of a CFC or 

10/50 corporation does not have to be 

signed. However, the controlling 

domestic shareholder completing the 

form must satisfy the requirements of 

Regulations section 1.964-1(c)(3) and 

retain the jointly executed consent 

described in Regulations section 

1.964-1(c)(3)(ii).

All Other Filers

If the filer is a corporation, the 

application must include the signature 

of the president, vice president, 

treasurer, assistant treasurer, or chief 

accounting officer (such as tax officer) 

authorized to sign, and their official 

title. Receivers, trustees, or assignees 

must sign any application they are 

required to file. For a consolidated 

group filing a consolidated return with 

its common parent, Form 1128 should 

be signed by an authorized officer of 

the common parent corporation.

Paid Preparer

Generally, anyone who is paid to 

prepare Form 1128 must sign it and fill 

in the “Paid Preparer Use Only” area. 

The paid preparer must complete the 

required information and sign the 

return in the space provided for the 

preparer's signature. However, if the 

applicant is requesting automatic 

approval and a copy of Form 1128 is 

attached to the income tax return, the 

copy of Form 1128 does not have to 

be signed.

Note. Anyone who prepares Form 

1128 but does not charge a fee 

should not complete the “Paid 

Preparer's Use Only” section.

Specific Instructions

Part I—General 

Information

All applicants must complete Part I. 

Attachments to Form 1128 must show 

the applicant's name, identifying 

number, and the address. Also 

indicate that the statement is an 

attachment to Form 1128.

Name

In general, the filer of the form is the 

applicant. If filing a joint return, include 

the names of both spouses. If the 

applicant is a corporation, 

partnership, estate, trust, or 

tax-exempt organization, etc., enter 

the name of the entity or organization.

Filer different from applicant. For 

members of a consolidated group of 

corporations and certain foreign 

corporations, Form 1128 may be filed 

on behalf of the applicant. For a 

consolidated group of corporations, 

enter the name and employer 

identification number (EIN) of the 

parent corporation on the first line as 

the filer and enter the name(s) and 

EIN(s) of the member corporations 

applying for a change in accounting 

period on the fourth line. For CFCs 

and 10/50 corporations, enter the 

name and EIN of the controlling 

domestic shareholder(s) (common 

parent, if applicable) on the first line 

and the name and EIN, if any, of the 

foreign corporation on the fourth line. 

If there is more than one filer or 

applicant, attach a statement listing 

each filer's or applicant's name and 

EIN.

Identifying Number

Individuals enter their social security 

number (SSN). If filing a joint income 

tax return, enter the SSN of both 

spouses. However, if one or both 

spouses are engaged in a trade or 

business and Form 1128 is filed on 

behalf of the business, enter the EIN 

instead of the SSNs. All other 

applicants enter their EIN.

You can apply for an EIN online 

(only for applicants in the United 

States or U.S. possessions), by 

telephone (only for applicants outside 

of the United States or U.S. 

possessions), or by fax or by mail 

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using Form SS-4, Application for 

Employer Identification, depending on 

how soon you need to use the EIN. 

Use only one method for each entity 

so you don't receive more than one 

EIN for an entity. For more information 

on applying for an EIN, see the 

Instructions for Form SS-4.

An SSN must be applied for on 

Form SS-5, Application for a Social 

Security Card. Form SS-5 can be 

obtained at SSA offices or by calling 

the SSA at 1-800-772-1213 (TTY 1–

800–325–0778). It is also available 

from the SSA website at SSA.gov.

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 identifying number.

Foreign corporations. If the 

applicant is a foreign corporation that 

is not otherwise required to have or 

obtain an EIN, enter “Not applicable” 

in the space provided for the 

identifying number.

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 filer has a 

P.O. box, show the box number 

instead.

If the filer receives its mail in care of 

a third party (such as an accountant or 

attorney), enter on the street address 

line “C/O” followed by the third party's 

name and street address or P.O. box.

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 not the filer or the applicant, 

attach Form 2848, Power of Attorney 

and Declaration of Representative.

Line 1. Check all applicable box(es) 

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. If the requested 

year is a 52-53-week tax year, 

describe the year (for example, last 

Saturday in December or Saturday 

nearest to December 31). 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.

A newly formed partnership or PSC 

that wants to adopt a tax year other 

than its required tax year must go to 

Part III after completing Part I.

Line 2c. An applicant's first tax year 

generally starts when business 

operations begin.

A corporation's tax year begins at 

the earliest date it first:

Has shareholders,

Has assets, or

Begins doing business.

The initial year ends on the day before 

the first day of the new tax year.

If the applicant is changing a tax 

year, the required short period return 

(usually for a period of less than 12 

months) is for the period that begins 

on the day following the close of the 

old tax year and ends on the day 

before the first day of the new tax 

year.

For example, in 2017, a 

corporation, which has a tax year 

ending December 31, requests a new 

tax year ending March 31. The 

corporation's first effective tax year 

(short year) begins on January 1, 

2017, and ends on March 31, 2017.

Part II—Automatic

Approval Request

Note. All references to the Revenue 

Procedures listed are to that Revenue 

Procedure or its successor.

Part II is completed by applicants 

requesting automatic approval of a 

change in tax year under:

Rev. Proc. 2006-45 (corporations) 

as clarified and modified by Rev. 

Proc. 2007-64, 2007-42 I.R.B. 818 at 

www.irs.gov/irb/2007-42_IRB/

index.html,

Rev. Proc. 2006-46 (pass-through 

entities),

Rev. Proc. 2003-62 (individuals),

Rev. Proc. 76-10, 1976-1 C.B. 548 

as modified by Rev. Proc. 79-3, 

1979-1 C.B. 483, and Rev. Proc. 

85-58 (exempt organizations), and

Rev. Proc. 85-15, 1985-1 C.B. 516 

(all filers), to correct the adoption of 

an improper tax year to a calendar 

year by filing an amended return on a 

calendar year basis and attaching 

Form 1128. If the applicants want to 

change to a fiscal year, file a Form 

1128 under the procedures of either 

Rev. Proc. 2006-45, 2006-46, 

2002-39, 2002-1 C.B. 1046 or any 

successor.

Note. Applicants requesting an 

automatic approval must complete 

Parts I and II only.

A user fee is not required if 

requesting an automatic 

approval under any of the 

sections of Part II listed below.

Complete Part II if the applicant can 

use the automatic approval rules 

under one of the sections listed below 

and the application is filed on time.

Section of Part II of Form 1128 To 

Complete

If the applicant is: Complete 

only:

A corporation (other than an S 

corporation or a PSC)

Section A

A partnership, S corporation, 

PSC, or a trust 

Section B

An individual Section C

A tax-exempt organization Section D

If the applicant does not qualify for 

automatic 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 can 

request relief under Regulations 

section 301.9100-3, discussed earlier 

under Late Applications. The 

applicant completes Part III, as 

discussed later, and sends Form 1128 

to the IRS National Office for 

consideration.

Section A—Corporations 

(Other Than S Corporations or 

Personal Service Corporations)

Rev. Proc. 2006-45 provides 

exclusive procedures for a 

corporation to obtain automatic 

approval to change its annual 

accounting period under section 442 

and Regulations section 1.442-1(b). A 

corporation complying with all the 

applicable provisions of this revenue 

procedure will be deemed to have 

TIP

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established a business purpose and 

obtained the approval of the IRS to 

change its accounting period. See 

Rev. Proc. 2006-45 for more 

information.

Line 1. A corporation is not allowed 

to use the automatic approval rules 

under section 4 of Rev. Proc. 2006-45 

if it:

1. Has changed its annual 

accounting period at any time within 

the most recent 48-month period 

ending with the last month of the 

requested tax year. For exceptions, 

see section 4.02(1) of Rev. Proc. 

2006-45.

2. Has an interest in a 

pass-through entity as of the end of 

the short period. For exceptions, see 

section 4.02(2) of Rev. Proc. 2006-45.

3. Is a shareholder of a FSC or 

IC-DISC, as of the end of the short 

period. For exceptions, see section 

4.02(3) of Rev. Proc. 2006-45.

4. Is a FSC or an IC-DISC.

5. Is an S corporation.

6. 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 tax year.

7. Is a PSC.

8. Is a CFC. For exceptions, see 

section 4.02(8) of Rev. Proc. 2006-45.

9. Is a tax-exempt organization, 

other than an organization exempt 

from tax under section 521, 526, 527, 

or 528.

10. 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 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.

11. Is a corporation leaving a 

consolidated group. The corporation 

is not allowed to use the automatic 

approval request procedures during 

the consolidated group's tax year in 

which the corporation ceased to be a 

member of the consolidated group. 

See Rev. Proc. 2007-64 for details.

12. Has a required tax year (for 

example, a real estate investment 

trust), unless the corporation is 

changing to its required tax year and 

is not described in items (1) through 

(11), above.

Note. If the corporation is not allowed 

to use the automatic approval rules 

because of items (1), (2), or (3), listed 

above, it can nevertheless 

automatically change to a natural 

business year that meets the 

25-percent gross receipts test 

described in section 5.04 of Rev. 

Proc. 2006-45.

If the answer to the question on 

Part II, Section A, line 1, is “Yes,” sign 

Form 1128 and see

Part II—Automatic Approval Request 

earlier under Where To File. Do not 

complete Part III. If the corporation is 

requesting to change to a natural 

business year that satisfies the 

25-percent gross receipts test, also 

include its gross receipts for the most 

recent 47 months (or for any 

predecessor).

If the answer to the question on 

Part II, Section A, line 1, is “Yes” 

because the applicant is a CFC that 

wants to make a one-month deferral 

election under section 898(c)(2), see 

Rev. Proc. 2007-64 which modifies 

the terms and conditions for this 

election provided in Rev. Proc. 

2006-45. If a CFC wants to revoke its 

one-month deferral election under 

section 898(c)(2) and change its tax 

year to the majority U.S. shareholder 

year (as defined in section 898(c)(3)), 

the CFC's controlling domestic 

shareholders must indicate the 

change in the tax year on the Form 

5471, Information Return of U.S. 

Persons With Respect To Certain 

Foreign Corporations, filed with 

respect to the CFC's first effective 

year.

If the answer to the question on 

Part II, Section A, line 1, is “No,” go to 

Part III.

Line 3. If a corporation's interest in a 

pass-through entity, CFC, FSC, or 

IC-DISC (related entity) is disregarded 

under section 4.02(2) or 4.02(3) of 

Rev. Proc. 2006-45 because the 

related entity is required to change its 

tax year to the corporation's new tax 

year (or, in the case of a CFC, to a tax 

year beginning one month earlier than 

the corporation's new tax year), the 

related entity must change its tax year 

concurrently with the corporation's 

change in tax year, under Rev. Proc. 

2006-45. This related party change is 

required notwithstanding the testing 

date provisions in section 706(b)(4)

(A)(ii), section 898(c)(3)(B), 

Temporary Regulations section 

1.921-1T(b)(6), and the special 

provision in section 706(b)(4)(B).

Section B—Partnerships, S 

Corporations, Personal Service 

Corporations, and Trusts

Rev. Proc. 2006-46 provides 

exclusive procedures for a 

partnership, S corporation, PSC, or 

trust within its scope to adopt, 

change, or retain its annual 

accounting period under section 442 

and Regulations section 1.442-1(b).

Rev. Proc. 2006-46 generally 

applies to trusts that are using an 

incorrect tax year and want to change 

to the required calendar tax year. 

However, exceptions apply to trusts 

exempt from taxation under section 

501(a), charitable trusts described in 

section 4947(a)(1), and grantor trusts 

described in Rev. Rul 90-55.

Line 4. A partnership, S corporation, 

PSC, or trust is precluded from using 

the automatic approval rules under 

section 4 of Rev. Proc. 2006-46 if any 

of the following apply:

1. The entity is under examination, 

unless it complies with the procedures 

provided in section 7.03(1) of Rev. 

Proc. 2006-46.

2. The entity is before an appeals 

office with respect to any income tax 

issue and its annual accounting 

period is an issue under consideration 

by the appeals office.

3. The entity is before a federal 

court with respect to any income tax 

issue and its annual accounting 

period is an issue under consideration 

by the federal court.

4. On the date the partnership or S 

corporation would otherwise file its 

application, the partnership's or S 

corporation's annual accounting 

period is an issue under consideration 

in the examination of a partner's or 

shareholder's federal income tax 

return or an issue under consideration 

by an area office or by a federal court 

with respect to a partner's or 

shareholder's federal income tax 

return.

Note. If any of the above 

circumstances apply, you may still be 

eligible under the automatic approval 

-5-
request procedures if you comply with 

the procedures explained following 

item 5 below. See section 7.03 of 

Rev. Proc. 2006-46 for more 

information.

5. The entity has changed its 

annual accounting period at any time 

within the most recent 48-month 

period ending with the last month of 

the requested tax year. For this 

purpose, the following changes are 

not considered prior changes in 

annual accounting period: (a) a 

change to a required tax year or 

ownership tax year; (b) a change from 

a 52-53-week tax year to a 

non-52-53-week tax year that ends 

with reference to the same calendar 

month, and vice versa; or (c) a 

change in accounting period by an S 

corporation or PSC, in order to comply 

with the common tax year 

requirements of Regulations sections 

1.1502-75(d)(3)(v) and 1.1502-76(a).

If the answer to the question on 

Part II, Section B, line 4, is “Yes,” and 

any of the following situations apply, 

the applicable additional procedures 

described below must be followed.

The applicant is under examination 

and has obtained the consent of the 

appropriate director to the change or 

retention of the applicant's annual 

accounting period. The applicant must 

attach to the application a statement 

from the director consenting to the 

change or retention. The applicant 

must also provide a copy of the 

application to the director at the same 

time it files the application with the 

Service Center. The application must 

contain the name(s) and telephone 

number(s) of the examination 

agent(s).

The applicant is before an appeals 

office and the applicant's annual 

accounting period is not an issue 

under consideration by the appeals 

office. The applicant must attach to 

the application a separate statement 

signed by the applicant certifying that, 

to the best of the applicant's 

knowledge, the applicant's annual 

accounting period is not an issue 

under consideration by the appeals 

office. The applicant must also 

provide a copy of the application to 

the appeals officer at the same time it 

files the application with the Service 

Center. The application must contain 

the name and telephone number of 

the appeals officer.

The applicant is before a federal 

court and the applicant's annual 

accounting period is not an issue 

under consideration by the federal 

court. The applicant must attach to the 

application a separate statement 

signed by the applicant certifying that, 

to the best of the applicant's 

knowledge, the applicant's annual 

accounting period is not an issue 

under consideration by the federal 

court. The applicant must also provide 

a copy of the application to the 

government counsel at the same time 

it files the application with the Service 

Center. The application must contain 

the name and telephone number of 

the government counsel.

If the answer to the question on 

Part II, Section B, line 4, is “No” 

because the applicant (or a partner or 

shareholder) is under examination 

and has not obtained the appropriate 

director's consent to the change or 

retention of the applicant's annual 

accounting period or the applicant is 

before an appeals office or federal 

court and the applicant's annual 

accounting period is an issue under 

consideration by the appeals office or 

federal court, do not complete Part III.

If the answer to line 4 is “No” solely 

because of a prior change as 

described in item (5) above, go to Part 

III after completing Section B.

If the answer to line 4 is “Yes” (and 

the answer to line 5, 6, or 7 is also 

“Yes”), sign Form 1128 and see Part 

II—Automatic Approval Request 

under Where To File, earlier. Do not 

complete Part III. If the answer to 

line 4 is “Yes” (and the answer to 

line 5, 6, or 7 is “No”), go to Part III.

Line 6. A partnership, S corporation, 

electing S corporation, or PSC 

establishes a "natural business year" 

under Rev. Proc. 2006-46 by 

satisfying the following "25-percent 

gross receipts test." The applicant 

must supply its gross receipts for the 

most recent 47 months (or for any 

predecessor) to compute the 

25-percent gross receipts test.

1. Prior 3 years gross receipts:

a. Gross receipts from sales and 

services for the most recent 12-month 

period that ends with the last month of 

the requested annual accounting 

period are totaled and then divided 

into the amount of gross receipts from 

sales and services for the last 2 

months of this 12-month period.

b. The same computation as in a, 

above, is made for the two preceding 

12-month periods ending with the last 

month of the requested annual 

accounting period.

2. Natural business year:

a. Except as provided in b, below, 

if each of the three results described 

in 1 above equals or exceeds 25 

percent, then the requested annual 

accounting period is deemed to be the 

taxpayer's natural business year.

b. The taxpayer must determine 

whether any annual accounting period 

other than the requested annual 

accounting period also meets the 

25-percent test described in a, above. 

If one or more other annual 

accounting periods produce higher 

averages of the three percentages 

(rounded to 1/100 of a percent) 

described in 1 above than the 

requested annual accounting period, 

then the requested annual accounting 

period will not qualify as the 

taxpayer's natural business year.

3. Special rules:

a. To apply the 25-percent gross 

receipts test for any particular year, 

the taxpayer must compute its gross 

receipts under the method of 

accounting used to prepare its federal 

income tax returns for such tax year.

b. If the taxpayer has a 

predecessor organization and is 

continuing the same business as its 

predecessor, the taxpayer must use 

the gross receipts of its predecessor 

for purposes of computing the 

25-percent gross receipts test.

c. If the taxpayer (including any 

predecessor organization) does not 

have a 47-month period of gross 

receipts (36-month period for the 

requested tax year plus an additional 

11-month period for comparing the 

requested tax year with other potential 

tax years), then it cannot establish a 

natural business year under this 

revenue procedure.

d. If the requested tax year is a 

52-53-week tax year, the calendar 

month ending nearest to the last day 

of the 52-53-week tax year is treated 

as the last month of the requested tax 

year for purposes of computing the 

25-percent gross receipts test.

Line 7. For an S corporation, an 

"ownership tax year" is the tax year 

other than a calendar year (if any) 

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that, as of the first day of the first 

effective year, constitutes the tax year 

of one or more shareholders 

(including any shareholder that 

concurrently changes to such tax 

year) holding more than 50 percent of 

the corporation's issued and 

outstanding shares of stock. For this 

purpose, a shareholder that is 

tax-exempt under section 501(a) is 

disregarded if such shareholder is not 

subject to tax on any income 

attributable to the S corporation. 

Tax-exempt shareholders are not 

disregarded, however, if the S 

corporation is wholly owned by such 

tax-exempt entities. A shareholder in 

an S corporation that wants to 

concurrently change its tax year must 

follow the instructions generally 

applicable to taxpayers changing their 

tax years contained in Regulations 

section 1.442-1(b), Rev. Proc. 

2002-39, or any other applicable 

administrative procedure published by 

the IRS.

Line 8. Answer “Yes” if the 

partnership is a related entity that 

must concurrently change its tax year 

as a term and condition of the 

approval of the taxpayer's request to 

change its tax year.

Section C—Individuals

Line 9. If the answer to this question 

is “Yes,” and the restrictions of section 

4.02 of Rev. Proc. 2003-62 (or its 

successor) do not apply, sign Form 

1128 and see Part II—Automatic 

Approval Request earlier under 

Where To File. Do not complete Part 

III. If the answer to this question is

“No,” go to Part III.

Section D—Tax-Exempt 

Organizations

A tax-exempt organization can 

request a change to its tax year under 

the simplified method of either 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 following conditions 

described in section 3.03 of Rev. 

Proc. 85-58 apply.

1. The organization was required 

to file an annual information return or 

Form 990-T, Exempt Organization 

Business Income Tax Return, at any 

time during the last 10 calendar years; 

and

2. 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).

Line 10. If the answer to this question 

is “Yes,” and the organization is a 

section 501(a) organization to which 

section 3.03 of Rev. Proc. 85-58 

applies or a central organization to 

which Rev. Proc. 76-10 applies, sign 

Form 1128 and see Part II—Automatic 

Approval Request earlier under 

Where To File. Do not complete Part 

III.

If the answer to this question is 

“Yes,” and Rev. Proc. 85-58 and 

76-10 do not apply, go to Part III.

Part III—Ruling Request

Part III is completed only by applicants 

requesting to adopt, change, or retain 

a tax year that cannot use the 

automatic procedures listed in Part II.

Also, the applicant must complete 

the specific section(s) in Part III that 

applies to that particular applicant.

Sections of Part III of Form 1128 

to Complete

If the applicant is: Complete only:

A corporation (other than 

an S corporation, 10/50 

corporation, or CFC)

Sections A and 

B, plus any other 

applicable 

section in Part III

An S corporation Sections A and C

A partnership Sections A and D

An Estate Sections A and G

An individual Section A

A CFC or 10/50 

corporation

Sections A and E

Do not file a tax return using 

the requested tax year until 

this application is approved.

Rev. Proc. 2002-39 provides the 

general procedures for obtaining 

approval to adopt, change, or retain a 

tax year for taxpayers not qualifying 

under the automatic approval rules or 

if the application is late.

Section A—General Information

All applicants must complete this 

section to request a ruling on an 

adoption of, change to, or retention of 

a tax year.

Line 1. If the applicant is a 

partnership, S corporation, personal 

service corporation, or trust and any 

of the following situations apply, the 

applicable additional procedures 

described below must be followed.

The applicant is under examination 

and has obtained the consent of the 

appropriate director to the change or 

retention of the applicant's annual 

accounting period. The applicant must 

attach to the application a statement 

from the director consenting to the 

change or retention of its annual 

accounting period. The applicant must 

also provide a copy of the application 

to the director at the same time it files 

the application with the IRS National 

Office. The application must contain 

the name(s) and telephone number(s) 

of the examination agent(s).

The applicant is before an appeals 

office and the applicant's annual 

accounting period is not an issue 

under consideration by the appeals 

office. The applicant must attach to 

the application a separate statement 

signed by the appropriate person 

certifying that, to the best of that 

CAUTION

!

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person's knowledge, the entity's 

annual accounting period is not an 

issue under consideration by the 

appeals office. The applicant must 

also provide a copy of the application 

to the appeals officer at the same time 

it files the application with the IRS 

National Office. The application must 

contain the name and telephone 

number of the appeals officer.

The applicant is before a federal 

court and the applicant's annual 

accounting period is not an issue 

under consideration by the federal 

court. The applicant must attach to the 

application a separate statement 

signed by the 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 applicant must also 

provide a copy of the application to 

the government counsel at the same 

time it files the application with the 

IRS National Office. The application 

must contain the name and telephone 

number of the government counsel.

Line 4a. Attach an explanation of the 

legal basis supporting the requested 

tax year. Include all authority 

(statutes, regulations, etc.) supporting 

the requested year. The applicant is 

encouraged to include all relevant 

facts and circumstances that may 

establish a business purpose.

Line 4b. If the applicant requests to 

establish a natural business year 

under the annual business cycle test 

or seasonal business test of sections 

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

2002-39, 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 tax years.

If the applicant is requesting to 

change to a natural business year that 

satisfies the 25-percent gross receipts 

test described in section 5.03(3) of 

Rev. Proc. 2002-39, the applicant 

must supply its gross receipts for the 

most recent 47 months (or for any 

predecessor).

Line 14. Applicants filing to request a 

letter ruling on a change in tax year 

under Rev. Proc. 2017-1 or its 

successor (updated annually) and 

Rev. Proc. 2002-39 must pay a user 

fee. A request for an exempt 

organization letter ruling on a change 

in tax year under Rev. Proc. 2017-5, 

2017-1 I.R.B. 230 at www.irs.gov/irb/

2017-01_IRB/ar03.html, also requires 

payment of a user fee.

A separate 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. 

2006-45, 2006-46, and 2003-62 

(Form 1128, Part II, Sections A, B, 

and C)).

Note. The user fees referred to in the 

above paragraphs are published in 

Rev. Proc. 2017-1 (exempt 

organizations, see Rev. Proc. 

2017-4), or an annual update. The 

annual updates are published as 

revenue procedures in the Internal 

Revenue Bulletin. The Internal 

Revenue Bulletins can be accessed at 

www.irs.gov/irb. The fees for 2017 are 

in Internal Revenue Bulletin 2017-1.

Payment of the user fee (check or 

money order made payable to the 

Internal Revenue Service) must be 

attached to Form 1128 at the time the 

form is filed. Payment may also be 

made through www.pay.gov. See 

Rev. Proc. 2017-1 (or any successor) 

for more information.

Section B—Corporations 

(Other Than S Corporations 

and Controlled Foreign 

Corporations)

Corporations must complete this 

section and any other section in Part 

III that applies to that particular entity. 

For example, a Passive Foreign 

Investment Company (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.

Note. In addition to excluding CFC(s) 

from Section B, 10/50 corporations 

are also excluded.

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:

1. A tax year that ends on 

December 31, or

2. Any other tax year if the 

corporation can establish a business 

purpose to the satisfaction of the IRS.

For purposes of 2, above, any 

deferral of income to shareholders will 

not be treated as a business purpose. 

For more information, see Rev. Proc. 

2006-46 and Rev. Proc. 2002–39.

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 automatic approval 

rules discussed earlier in the 

instructions for Part II, Section B. Also 

see the exceptions for partnerships 

under Who Must File, earlier.

Partners must also get separate 

advance approval to change their tax 

years.

Line 23. Enter the first date a 

business transaction resulted in a tax 

consequence, such as receiving 

income or incurring an expense.

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal 

Revenue laws of the United States. Section 442 says that you must obtain IRS approval if you want to adopt, change, or 

retain a tax year. To obtain approval, you must file an application to adopt, change, or retain a tax year. Sections 6001, 

6011, 6012(a), and 6109 and their regulations require you to provide the requested information. Failure to provide this 

information in a timely manner could delay processing or could result in denial of your application. Providing false 

information could subject you to penalties.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act 

unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be 

retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax 

returns and return information are confidential, as required by section 6103.

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However, section 6103 allows or requires the Internal Revenue Service to disclose or give the information shown on 

your application to others as described in the Code. For example, we may disclose your tax information to the 

Department of Justice to enforce the tax laws, both civil and criminal, and to cities, states, the District of Columbia, U.S. 

commonwealths or possessions, and certain foreign governments to carry out their laws. We may also disclose this 

information to federal and state agencies to enforce federal nontax criminal laws and to combat terrorism.

Keep this notice with your records. It may help you if we ask you for other information. If you have any questions about 

the rules for filing and giving information, call or visit any Internal Revenue Service office.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden 

for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the 

estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers 

who file this form is shown below.

Recordkeeping

Learning about the 

law or the form

Preparing 

and sending 

the form to 

the IRS

Parts I and II 8 hr., 36 min. 5 hr., 51 min. 6 hr., 15 min.

Parts I and III 22 hr., 14 min. 5 hr., 37 min. 7 hr., 26 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, 

we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to 

Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 

20224. Do not send the tax form to this office. Instead, see Where To File, earlier.

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