9100 relief: it may not be too late after all.

• Author: Kossman, Seth

It is not uncommon for a tax professional to fail to make a timely election for a client. Depending on the particulars of the case, it may be advisable for the professional immediately to contact a malpractice carrier. Nevertheless, the Treasury regulations offer a form of relief allowing a late election, commonly known as "section 9100 relief."Two types of relief are offered by Regs. Secs. 301.9100-1 through -3--automatic relief and nonautomatic relief.

Regs. Sec. 301.9100-2 Automatic Relief

Taxpayers may take advantage of automatic relief by taking what the IRS calls "corrective action." Corrective action includes filing the election according to the particular election's procedures. If the taxpayer must file the election along with a tax return, corrective action includes filing the original or amended tax return. Additionally, corrective action includes ensuring that all other related filings are consistent with the election, including filings from other years.

The deadline for taking corrective action under Regs. Sec. 301.9100-2 automatic relief is either six months or 12 months, depending on the election the taxpayer missed. The nine elections that receive a 12-month extension include those:

* To use a tax year other than that required under Sec. 444;

* To use the last-in, first-out inventory method under Sec. 472; and

* To adjust basis on partnership transfers and distributions under Sec. 754.

Other statutory and regulatory elections are granted a six-month automatic extension to take corrective action, as long as the election was due on the date the return was due, including extensions. However, if the election was due on the return's due date excluding extensions, the election is not granted the automatic six-month extension.

To take advantage of both the 12-month and six-month automatic extensions, the taxpayer must take corrective action within the deadline. However, an important difference between the 12-month and six-month extensions is whether the taxpayer had to timely file the return. Taxpayers can take advantage of the automatic six-month extension only if they timely filed the returns for the year in question. There is no such requirement for the 12-month extension.

Taxpayers taking advantage of automatic relief should send any return, statement of election, or other form that they must file to the same address to which the taxpayer would have sent it if it were timely filed. All documents filed as part of corrective...