IRS 1128 Explained

What is IRS 1128?

IRS Form 1128 is an important document used by businesses and individuals to request a change in their tax year. This form is specifically designed for those who want to adopt or change their accounting period under the tax regulations established by the Internal Revenue Service (IRS). By using IRS 1128, taxpayers can ensure that their tax reporting aligns with their financial reporting needs and operational realities.

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Purpose of IRS 1128

The primary purpose of IRS Form 1128 is to provide an official method for taxpayers to obtain approval for a change in their annual accounting period. This can be crucial for various reasons, such as aligning financial reporting with business cycles or responding to changes in ownership structures. Filing this form helps maintain compliance with IRS requirements, ensuring that taxpayers adhere to the rules regarding accounting periods.

Where is IRS 1128 used and by whom?

IRS 1128 is typically used in several scenarios by different groups:

1.

Businesses: Corporations and partnerships often use IRS 1128 to change their fiscal year. For example, a retail business may want to align its accounting period with its peak sales season.
2.

Individuals: Sole proprietors or single-member LLCs might file this form if they wish to change their accounting period for personal tax planning.
3.

Trusts and Estates: These entities may also use the form to adopt a specific accounting period that matches their financial reporting needs.

In each of these cases, the form facilitates proper alignment of tax reporting with actual business activities.

Step-by-step: how to fill out IRS 1128

Completing IRS Form 1128 requires attention to specific details. Here’s a general step-by-step guide to filling out the form:

1.

Header Information: Begin by entering the name, address, and taxpayer identification number (TIN) of the entity requesting the change.
2.

Current and New Accounting Periods: Indicate the current accounting period and the new period you wish to adopt.
3.

Reason for Change: Clearly state the reason for the requested change, ensuring it meets the IRS criteria.
4.

Signature: The form must be signed by an authorized official of the entity (if applicable) to validate the request.

To streamline this process, users can utilize pdfFiller, which allows seamless editing, eSigning, and management of documents online.

Who is required to complete IRS 1128?

IRS Form 1128 is required for any taxpayer seeking to change their annual accounting period. Specific requirements include:

1.

Corporations changing their tax year.
2.

Partnerships that need to align their fiscal year with business plans.
3.

Individuals and small businesses responding to changing financial circumstances.

Ultimately, any entity or individual looking to alter their established accounting period needs to complete this form to comply with IRS regulations.

Information you need to complete IRS 1128

To successfully fill out IRS Form 1128, you will need the following information:

1.

Name of the business or individual.
2.

Taxpayer Identification Number (TIN).
3.

Current and proposed accounting periods.
4.

Reason for the change in accounting period.
5.

Signature and title of the authorized individual, if applicable.

Gathering this information before starting the form can help facilitate a smoother filing process.

How to submit IRS 1128

Once you have completed IRS Form 1128, you have a few submission options:

1.

Mail Submission: You can send the form to the address specified in the form's instructions. Ensure it is postmarked by the required deadline.
2.

Online Submission: Although IRS Form 1128 isn't always available for online filing, you may check the IRS e-File services for any updates or changes in submission procedures.
3.

Consulting IRS Systems: Some taxpayers may benefit from using IRS management systems to keep track of their submissions and any potential updates on their status.

Always check for deadlines or special conditions that may apply to your situation before submitting the form.

When to update or refile IRS 1128

There are specific circumstances that may require you to update or refile IRS Form 1128:

1.

If you move your business to a different state, you might need to refile.
2.

Changes in ownership or structural changes within the company that affect fiscal compliance.
3.

New financial strategies or business plans that alter the accounting requirements.

Keeping your IRS filings current is important to avoid compliance issues.

What happens if you don’t file IRS 1128?

Failure to file IRS Form 1128 can result in significant consequences:

1.

Compliance Issues: The IRS may view your accounting practices as non-compliant, leading to potential audits.
2.

Tax Penalties: You may face fines or additional taxes owed due to improper reporting of income.
3.

Legal Consequences: Persistent failure to adhere to tax regulations can lead to more severe legal actions.

Filing IRS Form 1128 is essential for maintaining your business’s good standing with the IRS and ensuring your tax records are accurate and compliant.

Fill out IRS 1128 online

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Frequently Asked Questions About the IRS 1128

What is IRS 1128 used for?

IRS 1128 is a form that is used by businesses and individuals to apply for a change of accounting method or to adopt a new method of accounting with the IRS. This form is crucial for taxpayers who want to ensure compliance with tax regulations and potentially optimize their tax situation. By using IRS 1128, you can formally request permission to make these changes and provide the necessary documentation.

Who needs to file IRS 1128?

Any business or individual that wishes to change their accounting method must file IRS 1128. This applies to various entities, including sole proprietors, partnerships, and corporations. If you are considering a change that affects your accounting income or expenses, it's essential to consider filing IRS 1128 to adhere to IRS guidelines.

When should I file IRS 1128?

IRS 1128 should generally be filed when you are ready to change your accounting method, typically by the deadline of your tax return for the year in which you wish to make the change. Additionally, there are specific timing rules, such as that the application needs to be submitted within the tax year prior to the desired implementation. Understanding these nuances is critical for effective tax planning when utilizing IRS 1128.

What information do I need to complete IRS 1128?

Completing IRS 1128 requires specific information about your current accounting method and the one you wish to adopt. This includes details such as your business name, tax identification number, and information about the prior accounting methods used. Additionally, you need to provide reasoning for the change, which is vital for IRS review and consideration.

Can I submit IRS 1128 electronically?

Yes, you can submit IRS 1128 electronically if you are filing it as part of a larger electronic tax return. This can streamline the filing process and ensure prompt processing by the IRS. However, ensure that you are following IRS guidelines and requirements for electronic submissions concerning IRS 1128.

What happens after I submit IRS 1128?

After submission of IRS 1128, the IRS will review your application, and they may accept or reject your request for a change in accounting method. If accepted, you will receive confirmation, and your new accounting method will be in effect the following year. If additional information is needed, the IRS may contact you regarding IRS 1128.

Is there a filing fee for IRS 1128?

There is no specific filing fee associated with submitting IRS 1128 itself. However, it's important to note that potential costs could arise if you require professional assistance or if your accounting changes necessitate additional filings or consultations. Always consider these aspects when planning to use IRS 1128.

How long does it take for the IRS to process IRS 1128?

The processing time for IRS 1128 can vary depending on the volume of applications the IRS is handling at any given time. Typically, the IRS aims to process these applications within several months. It’s advisable to file IRS 1128 well in advance of your desired implementation date to avoid any potential delays.

Will using IRS 1128 affect my tax liabilities?

Using IRS 1128 can potentially affect your tax liabilities, as a change in accounting method may alter the way income and expenses are recognized. This can lead to differences in taxable income and, therefore, the amount of tax owed. It is crucial to consult with a tax professional to understand the implications and ensure you are making an informed decision regarding IRS 1128.

Where can I find IRS 1128 forms and instructions?

IRS 1128 forms and their instructions can be found on the official IRS website. Additionally, there are numerous resources available to help taxpayers fill out the form accurately, including detailed guides and examples. Accessing quality resources will ensure you understand how to complete IRS 1128 correctly and efficiently.

Author:

by Iryna Marchuk

Lead Writer/Blogs Manager at airSlate

Disclaimer: This content is for informational purposes only. It is not legal or other professional advice. airSlate provides this material on an "as-is" basis and disclaims all representations, guarantees, or warranties, whether express, implied, or statutory, including but not limited to warranties of merchantability, fitness for a particular purpose, or accuracy.