Who files and who does not
The Form 1128 instructions say taxpayers generally must file to adopt, change or retain a tax year, and that partnerships, S corporations, personal service corporations (PSCs) and trusts may have to file to adopt or retain a particular year. Under Treas. Reg. 1.442-1, a change in annual accounting period generally needs the Commissioner's approval. The common parent of a consolidated group files one Form 1128 for the group.
The instructions list exceptions where Form 1128 is not filed, including:
- a corporation adopting its first tax year, or changing to file a consolidated return with a new parent;
- a newly formed partnership adopting a required tax year or a 52-53-week year referencing it;
- a partnership, S corporation or PSC making a section 444 election on Form 8716, or terminating one;
- a corporation electing S status on Form 2553 and requesting to change or retain its tax year in Part II of Form 2553 (see also late S election relief if that election is late);
- a trust adopting the calendar year required by section 644; and an estate adopting its first tax year.
IRM 3.13.2.21 also tells examiners what does not count as adopting or changing a tax year: filing an extension on Form 7004, submitting Form SS-4, or paying estimated tax. Separately, a Form 1128 filed to terminate a section 444 election is returned; the IRM says those filers should write the termination statement across the top of the short period return instead.
Automatic approval or ruling
| Form 1128 part | Procedure | Who it covers | Key limits |
|---|---|---|---|
| Part II, Section A | Rev. Proc. 2006-45 (as modified) | Corporations other than S corporations and PSCs | Not available if the corporation changed its year within the most recent 48-month period ending with the last month of the requested year, subject to listed exceptions; other scope limits in section 4.02 |
| Part II, Section B | Rev. Proc. 2006-46 | Partnerships, S corporations, electing S corporations, PSCs and trusts | Change to the required year; natural business year meeting the 25-percent test; ownership tax year for S corporations; certain 52-53-week changes. Not for a taxpayer under exam without director consent, an S termination year, or a section 444 election |
| Part II, Section C | Rev. Proc. 2003-62 | Individuals changing to a calendar year | |
| Part II, Section D | Rev. Proc. 85-58 | Exempt organizations | Due by the 15th day of the 5th month after the short period |
| Part III | Ruling request; Rev. Proc. 2002-39 rules for nonautomatic changes | Anyone not eligible for automatic approval, including business purpose years | User fee; filed with the national office |
Rev. Proc. 2026-1, Appendix F, confirms that Rev. Proc. 2006-45 (as clarified and modified by Rev. Proc. 2007-64), Rev. Proc. 2006-46 and Rev. Proc. 2003-62 remain the automatic change procedures, and that no user fee applies to a change made under them.
Pass-through entities are constrained. Under Rev. Proc. 2006-46, the required tax year is determined under section 706(b) for a partnership, section 644 for a trust and section 1378 for an S corporation, and IRM 3.13.2.21 summarizes that S corporations and PSCs must use the calendar year unless they qualify for another permitted year. The same IRM notes for transaction code use that “Partnerships, S corporations and PSCs cannot change their accounting period on Form 1128 like a regular corporation can.” Their options are a permitted year: the required year, a natural business year, an S corporation ownership tax year, a section 444 year, or a year with a business purpose approved by ruling.
An S corporation's ownership tax year is the year that, as of the first day of the first effective year, is the tax year of shareholders holding more than 50 percent of the issued and outstanding shares (Rev. Proc. 2006-46, section 5.08).
The natural business year test
Rev. Proc. 2006-46, section 5.07, defines the 25-percent gross receipts test. For the most recent 12-month period ending with the last month of the requested year, divide gross receipts from sales and services for the last 2 months by gross receipts for the full 12 months. Do the same for the two preceding 12-month periods. Each of the three results must be at least 25 percent.
Two refinements matter in practice. If any other year also meets the test and produces a higher average of the three percentages, the requested year is not the natural business year. And the taxpayer needs 47 months of gross receipts history (36 months for the requested year plus 11 more to compare the other possible years); a taxpayer without that history, including any predecessor's receipts, cannot use the automatic procedure. IRM 3.13.2.21 notes that the application must show gross receipts separately for each month of the most recent 47 months. Receipts are computed under the method of accounting used for the returns.
A natural business year change under Rev. Proc. 2006-46 is not available if the taxpayer changed its annual accounting period within the most recent 48-month period ending with the last month of the requested year, unless the earlier change was to the required or ownership year or one of the other listed exceptions (section 4.02(5)).
Deadlines and early filing
| Request | Deadline (Form 1128 instructions) |
|---|---|
| Automatic, Rev. Proc. 2006-45 or 2006-46 | Due date of the return, including extensions, for the short period required to make the change |
| Automatic, Rev. Proc. 2003-62 (individuals) | Due date, including extensions, of the short period return |
| Automatic, Rev. Proc. 85-58 (exempt organizations) | 15th day of the 5th calendar month after the end of the short period |
| Ruling request (Part III) | Due date, not including extensions, of the return for the first effective year |
For ruling requests, the instructions add: “Do not file earlier than the day following the end of the first effective year.” Generally, an application submitted before the end of the short period will not be considered. IRM 3.13.2.21.2 handles early automatic filings differently: the campus holds an early Form 1128 until it can be processed rather than returning it.
IRM 3.13.2.21.2 lists the general return due dates the campus uses to judge automatic requests: the 15th day of the 3rd month after the period ends for Forms 1120-S and 1065, and the 15th day of the 4th month for Form 1120 and Form 1041, with extensions counted for automatic requests.
Late applications
A late Form 1128 is a 301.9100-3 problem. The instructions say an application filed within 90 days after the due date may be treated as timely if the taxpayer shows it acted reasonably and in good faith and relief will not prejudice the Government, and: “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.” Treas. Reg. 301.9100-3(c)(3) is the source of that rule for accounting period elections other than section 444.
Either way, the request is a letter ruling request under the annual procedure, now Rev. Proc. 2026-1, with a user fee, and it is subject to public inspection under section 6110. For 2026, the fee for a 301.9100-3 extension to file Form 1128, Form 8716 or Part II of Form 2553 is $6,100, or $3,450 for a requester with gross income under $400,000. The campus does not grant late relief itself: under IRM 3.13.2.21.8, a Form 1128 that is late is denied with TC 059 and returned with Letter 2233C, and correspondence disputing a late filing denial is answered by explaining that such requests go to Chief Counsel. See section 9100 relief for the full standards.
Where to file
Automatic (Part II). File with the Internal Revenue Service Center, Attention: Entity Control, at the address where the applicant files its income tax return, and attach a copy to the federal return for the short period. The instructions warn against sending automatic requests to the national office: “Doing so will result in a significant delay in the processing of your request.” A corporation changing its year before electing S status, where the new year is permitted for S corporations, files Form 1128 as an attachment to Form 2553 instead. IRM 3.13.2.21.1 says automatic requests are processed at the Kansas City or Ogden sites.
Ruling (Part III). File with the user fee at 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. Per the instructions, “The IRS will acknowledge receipt of the application within 45 days.” If nothing is heard within 90 days, contact the Control Clerk, CC:ITA. The Form 1128 PDF carries a notice that exempt organizations filing a ruling request now use 1973 N Rulon White Blvd M/S 6273, Ogden, Utah 84201. The 2026 ruling fee for a Form 1128 request is $5,750, or $3,450 under the gross income threshold (Rev. Proc. 2026-1, Appendix A).
How the campus processes it
BMF Entity checks completeness, signature and timeliness before anything else (IRM 3.13.2.21.2 and 3.13.2.21.3). The signature must be the taxpayer's: “A POA cannot sign Form 1128, the taxpayer must sign.” For corporations, that means the president, vice president, treasurer, assistant treasurer or chief accounting officer with title; for partnerships and LLCs, a general partner or member-manager; for trusts and estates, the fiduciary. A form signed only by the representative is returned as unprocessable. A power of attorney attached to the form is forwarded to the CAF unit; see Form 2848.
| Transaction | Meaning | Notice |
|---|---|---|
| TC 053 | Approved change of accounting period (Form 1128 or change to a 52-53-week year) | CP 284 |
| TC 054 | Approved adoption, change or retention for partnerships, S corporations and PSCs | CP 284 |
| TC 059 | Denial of Form 1128 | CP 285 (suppressed when the denial is for late filing, with Letter 2233C sent instead) |
Ruling requests that reach the campus are faxed to the national office with a cover sheet, and the taxpayer receives Letter 86C. When an automatic change is approved, IRM 3.13.2.21.7 also has the examiner request a transfer of any credits to the new tax period. Two IRM instructions protect taxpayers from campus errors: examiners are told “Do not reject Form 1128 if the FYM on IDRS has been inaccurate or invalid”, and an early automatic request is held rather than returned. For individuals, see IRM 3.13.5.33, which the business IRM cross-references.
Questions practitioners ask
Does an S corporation use Form 1128 to pick a fiscal year when it elects?
Generally no. The instructions list a corporation electing S status on Form 2553 and requesting to change or retain its year as an exception; the request goes in Part II of Form 2553. A business purpose request in Part II of Form 2553 carries a $5,750 fee in 2026.
Can a corporation change its tax year every year?
Not automatically. Rev. Proc. 2006-45 excludes a corporation that changed its year within the most recent 48-month period ending with the last month of the requested year, subject to listed exceptions. A nonautomatic change can still be requested by ruling.
What if the short period return is already extended?
For automatic changes under Rev. Procs. 2006-45 and 2006-46, the deadline is the due date of the short period return including extensions.
Is there a fee for an automatic change?
No. Rev. Proc. 2026-1 says no user fee is required for a change in accounting period made under a published automatic change procedure.
Who handles a request from a controlled foreign corporation?
The controlling domestic shareholders file on its behalf, and IRM 3.13.2.21.3.4 sends the approval or denial to them. IRM 3.13.2.21 notes that under Public Law 119-21, a specified foreign corporation may not elect a one-month deferral year for tax years beginning after November 30, 2025.