Rev. Proc. 77-39

Section 1. Purpose

The purpose of this Revenue Procedure is to modify Sec. 2 and Sec. 3 of Rev. Proc. 64-51, 1964-2 C.B. 1003, as amplified by Rev. Proc. 70-15, 1970-1 C.B. 441, which provides an administrative procedure whereby taxpayers may expeditiously obtain consent to change their method of accounting for bad debts from the specific charge-off method to the reserve method. Rev. Proc. 64-51 requires that a taxpayer desiring to make the above change must file an application on Form 3115, Application for Change in Accounting Method, within the first ninety days of the taxable year in which the change is to be effected.

Sec. 2. Background

.01 Rev. Proc. 64-51 is modified to reflect amendments to the Income Tax Regulations under section 446 of the Internal Revenue Code of 1954 pertaining to the time within which the Form 3115 must be filed (Section 1.446-1(e)(3)(i) of the Income Tax Regulations, T.D. 7073, 1970-2 C.B. 98) and to provide for the acceptance of certain late applications as timely filed under the authority of section 1.9100-1 of the regulations.

Sec. 3. Implementation

.01 Sections 2 and 3 of Rev. Proc. 64-51 are modified to provide that the Form 3115 shall be filed with the Commissioner of Internal Revenue, Attention T:C:C, Washington, D.C. 20224, within 180 days after the beginning of the taxable year in which the change is to be effected.

.02 Under the authority of section 1.9100-1 of the regulations, a request that is not filed within the 180-day period after the beginning of the taxable year for which the change is requested may nevertheless be treated as timely filed upon (a) a showing of good cause by the taxpayer as to why it failed to file within the 180-day period and (b) a showing by the taxpayer that such treatment will not jeopardize the interests of the Government.

.03 The signature of the individual or firm preparing the application for the taxpayer should appear in the space provided at the bottom of page 1, on the Form 3115. An application made by an agent on behalf of a taxpayer should be accompanied by a power of attorney authorizing the agent to represent the taxpayer.

Sec. 4. Effect on Other Documents

Rev. Proc. 64-51, as amplified by Rev. Proc. 70-15, is modified.