Changing Fiscal Year
Greetings Mr. Kerstetter,I just stumbled upon your site the other day. Thank you for maintaining it, it's a great resource.I wanted to ask you about your article "Choosing A Fiscal Year". In it, you talk about the virtues of choosing a FYE other than 12/31. You say "once the first 1120 has been filed with IRS, the fiscal year is set in stone."I was reading on another site about Form 1128 which seems to allow you to petition the IRS for a new FYE. Can you comment on this?Best,
While you are correct that there is an official form to request a change in an entity's tax year, the actual use of it is very discriminatory. Because of the very well known tax savings opportunities in having a non 12/31 year end, IRS will almost always grant a request to change from a year ending in any other month to 12/31; but will almost never grant a request to change from 12/31 to the end of any other month.
I don't have any official stats on percentages of which tax year changes are granted and denied; but my 32 years of experience in this area have given me complete confidence in my conclusions. I would welcome any comments from any readers who have had a successful track record of obtaining IRS permission to change from 12/31 tax years to other months. I doubt any tax pro can cite such a record because of the well known IRS policy of doing what it can to force as many taxpayers into a calendar tax year as possible.
That is why it is so important to properly select the appropriate tax year with the very first 1120 filed.
I hope this answers your question.
Thanks for writing.