Correcting Errors and Changing Accounting Methods: Missed Elections, Rescinding Elections, Uncertain Tax Positions

Few matters are more troubling than discovering a new or existing client has missed a critical election. Relief exists for missed S-elections, check-the box elections, Section 754 elections, grouping elections, and other critical deadlines. Updated annually, the recent IRS Revenue Procedure 2019-43 provides a list of automatic accounting method changes. These changes can be made immediately, without IRS approval, and often include a Section 481(a) adjustment. Some taxpayers are reevaluating entity choices after tax reform. IRS Regulations 301.7701-3(c)(1)(iv) provide a method of changing entity classification.

Revenue Procedure 2013-30 provides relief for missed or late S-elections, and Section 9100 regulations provide automatic relief for certain late elections, including Section 754 elections. If an entity qualifies under the automatic procedures, corrections can be made without a costly private letter ruling (PLR). Sometimes, a PLR is the only option; however, at $30,000, this is not a viable option for many taxpayers. Certain taxpayers, however, may be eligible to submit a PLR for as little as $2,800.

Neglecting to mail Form 3115 to the proper IRS office and attach a second copy to your return, not waiting five years when changing an entity classification, and not correctly noting the applicable revenue procedure on the face of a return are examples of foot faults the IRS can use to deny the requested relief. Practitioners must not only understand relief available but also how to apply for relief properly and avoid missteps.

Listen as our panel of experts discusses using statutory and regulatory relief available under Section 9100 regulations, preparing Form 3115 for method changes, applying for a PLR, as well as when it is advisable to disclose an uncertain tax position in a return.

1. Missed elections: an overview
2. Section 9100 relief
   1. Regulatory
   2. Statutory
3. Form 3115 relief
4. Rescissions
5. Other relief
6. Private letter rulings
7. Uncertain tax positions
8. CARES Act changes

The panel will review these and other critical issues:

• What automatic relief is available by filing Form 3115?
• When does the fear of potential penalties outweigh the fear of filing Forms 8275 or 8275-R?
• How to make a late Section 754 election
• What relief is available for late S-corporation elections?

Learning Objectives

After completing this course, you will be able to:

• Distinguish between regulatory and statutory relief under Section 9100
• Identify what automatic relief is available along with filing Form 3115
• Determine potential foot faults when applying for relief
• Ascertain when a private letter ruling may be a taxpayer's only recourse

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).