In 2010, some partners of our limited liability partnership were bought out. We filed a short tax return and then filed a second return for the remainder of the 2010 tax year. My bookkeeper passed away and in the confusion that followed, we did not change the accounting method from cash to an accrual method as we should have. Can we change and re-file using the accrual method like it should have been for the 2010 tax year?

ANSWER

The BIDaWIZ Team's Answer:

Typically, to request a change in accounting method via IRS Form 3115, you need to file it before the due date of the original tax return. However, there are a couple of exceptions that may apply to your situation. Specifically, the IRS may grant an extension of time to file an automatic Form 3115 (beyond the 6 month grace-period) only in unusual and compelling circumstances (refer to Internal Revenue Code Section 301.9100-3(c)(2); Rev. Proc. 2011-14, §6.02(3)(d)(ii); and Rev. Proc. 2013-1 (or its successor)). Essentially, this means that you will need to construct a letter to the IRS Commission to request an extension to file an automatic Form 3115 to change your accounting method for the 2010 tax year. You need the commissioner's consent for this to be allowed.