Need to change your business’s accounting period with the IRS? This requires a formal request. A sample letter helps you do this correctly.
This article provides sample letters. You can use these as templates. They’ll make writing your own letter much easier. These are ready-to-use examples.
We’ll give you several options. You can adapt them to your specific situation. This will save you time and effort.
Sample Letter to IRS for Change of Accounting Period
[Your Name]
[Your Address]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[IRS Address]
Subject: Request to Change Accounting Period – Taxpayer Identification Number [Your Taxpayer Identification Number]
Dear Sir/Madam,
This letter formally requests a change to our accounting period. Currently, our accounting period runs from January 1st to December 31st. We are seeking to change this to a fiscal year running from July 1st to June 30th.
This change is necessary to better align our accounting practices with our business cycle. Our peak season occurs during the summer months, making a fiscal year ending June 30th more suitable for accurate financial reporting. This will simplify our financial reporting and tax preparation processes. We believe this adjustment will provide a clearer picture of our annual performance.
We understand that approval requires demonstrating a valid business purpose. We have attached supporting documentation, including our current financial statements and a detailed explanation of how this change will benefit our financial reporting. Please review these documents carefully.
We request your prompt consideration of this request. We are available to answer any questions you may have. Thank you for your time and attention to this matter.
Sincerely,
[Your Signature]
How to Write a Sample Letter to IRS for Change of Accounting Period
Understanding the Nuances of Accounting Period Changes
Altering your accounting period isn’t a trivial matter. The Internal Revenue Service (IRS) mandates adherence to specific regulations. A capricious alteration can lead to penalties. Therefore, a meticulously crafted request is paramount. Your letter must demonstrate a cogent reason for the change, justifying the disruption to the established fiscal calendar.
Form 1128: Your Primary Weapon
Form 1128, “Application for Change in Accounting Period,” is your linchpin. This form, coupled with a well-written explanatory letter, provides the IRS with the necessary documentation. Don’t underestimate its importance; incomplete submissions often result in delays and rejections. Ensure accuracy in every detail; a single oversight could be deleterious to your application.
Crafting a Compelling Narrative: The Art of Persuasion
Your accompanying letter should not merely reiterate the information provided on Form 1128. Instead, it should elucidate the rationale behind your request. Use this opportunity to present a compelling case. Are you seeking to align your accounting period with that of a parent company? Has a significant business event necessitated a change? Articulate your reasons with precision and clarity. Use strong verbs and concise sentences. Avoid ambiguity.
Essential Elements of Your Letter: A Detailed Checklist
Your letter must include specific details. Start with your Taxpayer Identification Number (TIN). Clearly state the requested accounting period change—the current period and the proposed new one. Provide a succinct explanation of the business exigencies driving your request. Finally, include your contact information—phone number and email address—for expeditious communication.
Maintaining a Formal and Respectful Tone
Maintain a professional, respectful tone throughout your letter. Avoid colloquialisms and informal language. The IRS appreciates precision and efficiency. Remember, your letter is a formal request to a government agency. Therefore, meticulous attention to detail and proper grammatical structures are imperative.
Review and Revision: The Critical Final Step
Before submitting your letter, meticulously review it for any errors—grammatical, factual, or typographical. A second pair of eyes is invaluable. Have a colleague or accountant review your document. A single oversight could jeopardize your application. Ensure your letter is impeccable before sending.
Submitting Your Application: The Final Hurdle
Submit your Form 1128 and accompanying letter via the method specified by the IRS. Adhere to their instructions scrupulously. Retain copies of all submitted documentation for your records. Promptly address any correspondence from the IRS concerning your application. Success hinges on meticulous attention to detail and timely response.
FAQs about sample letter to IRS for change accounting period
Changing your accounting period with the IRS requires careful documentation. This FAQ section addresses common questions about writing a letter to request this change.
What information is essential to include in my letter requesting an accounting period change?
Your letter should clearly state your request to change your accounting period, including the current accounting period and the desired new accounting period (e.g., from calendar year to fiscal year). Crucially, you must provide your Employer Identification Number (EIN) or Social Security Number (SSN), your business name and address, and a valid reason for the change (e.g., aligning with your industry’s standard or improving business operational efficiency). It’s also advisable to include contact information.
What constitutes a valid reason for changing my accounting period?
The IRS generally accepts requests for changes that are supported by demonstrable business reasons. These reasons often include aligning with the natural business cycle, improving financial reporting clarity, or simplifying tax preparation. Simple convenience is usually insufficient. Your letter should clearly explain why the change is beneficial to your business operations and how it impacts your accounting practices.
When should I submit my request to change my accounting period?
Ideally, you should submit your request to the IRS well in advance of your desired effective date for the new accounting period. The IRS needs time to process the application, and allowing ample time prevents delays in filing your tax returns. Check the IRS website for current processing times and deadlines for submitting applications for accounting period changes.
What format should the letter be in, and should it be sent via mail or electronically?
While there’s no prescribed format, your letter should be professional, clear, and concise. Use a standard business letter format with your contact information and the IRS’s address clearly stated. Generally, the IRS prefers that applications for accounting period changes are submitted via mail. Always retain a copy of the letter and any supporting documents for your records.
What happens after I submit my request?
After submitting your request, the IRS will review your application and may contact you for further information if needed. You’ll receive a notification of their decision, either approving or denying your request. If approved, pay close attention to any instructions regarding filing your tax returns under the new accounting period. If denied, the IRS will typically explain reasons for the denial.
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