Form 3115 Filing Deadlines and Requirements

The form 3115 filing deadline for automatic method changes is tied directly to the tax return deadline for the year of change. This means Form 3115 must be filed with the timely filed original return, including any valid extensions. There is no separate or earlier filing deadline for the form itself, but it also cannot be filed late or separately from the return.

For calendar year taxpayers, the original deadline is April 15 for individuals and March 15 for S corporations and partnerships, or April 15 for C corporations. If the taxpayer extends the return, the form 3115 deadline extends to the extended due date: October 15 for individuals and C corporations, or September 15 for S corporations and partnerships. These deadlines apply regardless of when the cost segregation study is completed.

The deadline is a bright line procedural requirement. Filing even one day late disqualifies the taxpayer from automatic consent procedures and triggers the need for alternative approaches. This strict timing requirement is why property owners should begin the cost segregation and Form 3115 preparation process well before the tax filing deadline.

Understanding when to file form 3115 requires distinguishing between the year of change (the first year the new method is used) and the prior years covered by the adjustment. Form 3115 is always filed with the return for the year of change, but the Section 481(a) adjustment captures depreciation differences from all prior years going back to the placed in service date.

Taxpayers who file their return by the original deadline (without extension) must include Form 3115 with that original filing. If a calendar year individual files by April 15, Form 3115 must be attached to the April 15 return. However, most taxpayers implementing cost segregation choose to extend their return to allow additional time for study completion and form preparation.

Filing an extension does not change the form 3115 requirements but provides additional time to complete the process correctly. For calendar year individuals, extending to October 15 provides six additional months to complete the cost segregation study, calculate the Section 481(a) adjustment, prepare Form 3115, and coordinate with the tax preparer. This additional time is often essential for complex properties or situations.

The extension must be valid and timely filed to extend the Form 3115 deadline. Simply filing late does not qualify as an extension. Taxpayers must file Form 4868 (individuals), Form 7004 (businesses), or the applicable extension form by the original return deadline to obtain a valid extension. Only a valid extension extends the form 3115 due date.

One of the most commonly overlooked form 3115 requirements is the dual filing mandate. Taxpayers must file one copy of Form 3115 with their tax return submitted to their regular IRS service center, and must also mail a duplicate copy to the IRS national office in Ogden, Utah. Both copies must be filed by the return due date, including extensions.

The national office copy is sent to: Internal Revenue Service, 1973 N Rulon White Blvd., MS 6111, Ogden, UT 84404. This mailing should be sent via certified mail or another trackable method to create proof of timely filing. The postmark date determines whether the national office filing is timely, so mailing on or before the deadline satisfies the requirement.

Failure to file the duplicate copy with the national office can result in the accounting method change being deemed invalid, even if the form was properly included with the tax return. The IRS uses the national office copy to track method changes and maintain central records. Missing this filing can jeopardize the entire change and may not be discovered until years later during an audit.

Taxpayers should maintain proof of both filings. For the return copy, this means keeping a copy of the complete tax return showing Form 3115 was attached. For the national office copy, this means retaining the certified mail receipt or other proof of mailing showing the timely postmark date. This documentation is essential if the IRS later questions whether the dual filing requirement was met.

Different entity types have different tax return deadlines, and the 3115 due date follows those entity specific deadlines. Individual taxpayers (Form 1040) have an original deadline of April 15 and extended deadline of October 15. This six month extension period is often critical for completing cost segregation studies and Form 3115 preparation.

C corporations filing Form 1120 also have an April 15 original deadline and October 15 extended deadline, providing the same six month extension window as individuals. However, S corporations and partnerships have earlier original deadlines. S corporations (Form 1120S) and partnerships (Form 1065) must file by March 15, with extended deadlines of September 15.

The earlier deadlines for pass through entities can create timing challenges for cost segregation implementation. Property owners who own real estate through S corporations or partnerships have one month less time under the original deadline and one month less time under extension. This makes early planning even more critical for pass through entity owners.

Fiscal year taxpayers have deadlines based on their fiscal year end. A fiscal year ending June 30 would have an original deadline of October 15 and extended deadline of April 15 of the following year. The same timing rules apply: Form 3115 must be filed with the timely filed original return, including extensions, regardless of the fiscal year.

Property owners have flexibility in choosing which tax year to designate as the year of change, and this strategic decision can significantly impact the tax benefits of cost segregation. The year of change is the first year the new depreciation method is used, and it is also the year in which the entire Section 481(a) adjustment is claimed under automatic procedures.

Choosing an earlier year of change maximizes the Section 481(a) adjustment because more years of cumulative depreciation differences are captured. However, the taxpayer must have sufficient income in that year to utilize the deduction, or the deduction may be limited by passive activity rules, at risk limitations, or net operating loss provisions.

Some taxpayers strategically choose a later year of change to align with anticipated higher income, changes in tax rates, or the release of suspended passive losses. For example, a taxpayer planning to sell another property or recognize other income might choose that year as the year of change to maximize the value of the cost segregation deduction against higher taxable income.

However, delaying the year of change means continuing to use the less favorable depreciation method in the interim years and forgoing the time value benefit of earlier deductions. The decision requires careful tax planning and projection of future income and tax situations. Many taxpayers work with their CPA to model different year of change scenarios before making the final decision.

Missing the form 3115 filing deadline has serious consequences. The most immediate impact is disqualification from automatic consent procedures. Automatic consent allows taxpayers to implement the change without advance IRS approval, claim the entire Section 481(a) adjustment in one year, and avoid user fees. Losing automatic consent eliminates all these benefits.

When automatic consent is lost due to a missed deadline, taxpayers must either file under non automatic procedures or pursue other alternatives. Non automatic procedures require filing Form 3115 at least 120 days before the end of the year of change, obtaining advance IRS approval (which can take 6 to 12 months), and paying substantial user fees ranging from $11,500 to $31,500 depending on the circumstances.

Additionally, non automatic procedures may result in the IRS requiring the Section 481(a) adjustment to be spread over multiple years rather than taken immediately. This reduces the cash flow benefit and extends the time needed to capture the full tax benefit. The IRS may also impose other conditions on the change or deny the request entirely.

If a taxpayer misses the form 3115 deadline for the intended year of change, several options may be available depending on the specific circumstances. The first option is to file under non automatic consent procedures, which requires submitting Form 3115 at least 120 days before the end of the desired year of change, paying the required user fee, and waiting for IRS approval.

A second option is to request late filing relief under the provisions of Rev. Proc. 2015-13 or other applicable revenue procedures. Late relief is available in certain limited circumstances, such as when the taxpayer had reasonable cause for the late filing and the IRS has not yet contacted the taxpayer about the issue. However, late relief is not guaranteed and requires demonstrating good faith and reasonable cause.

A third option is to wait and designate a future year as the year of change, filing Form 3115 timely with that future year return. This approach avoids the complications of late filing but means continuing to use the old depreciation method in the interim and delaying the tax benefits. The future year Section 481(a) adjustment will still capture all prior years back to placed in service.

In some limited situations, filing an amended return may be an alternative, particularly if the taxpayer is within the statute of limitations for the years in question and made an error that needs correction. However, this approach has significant limitations and is generally not the preferred method for implementing cost segregation. Understanding the differences between Form 3115 and amended returns helps taxpayers choose the appropriate path when deadlines are missed.

Beyond the filing deadline, several other procedural requirements must be met to qualify for automatic consent. The taxpayer cannot be under IRS examination for the year of change or any earlier year. Being under exam disqualifies the taxpayer from automatic procedures and requires filing under non automatic procedures instead.

The Form 3115 must identify the correct designated automatic accounting method change number (DCN) from the applicable revenue procedure. For cost segregation, this is typically DCN 205 for changes in computing depreciation under Rev. Proc. 2015-13. Citing the wrong DCN or revenue procedure can cause processing delays or disqualification from automatic consent.

All parts of Form 3115 must be completed accurately and completely. Part I covers general information about the applicant and the change. Part II applies to automatic changes and requires specific information about the revenue procedure and DCN. Part IV contains the Section 481(a) adjustment calculation, which must be supported by detailed workpapers. Incomplete forms may be rejected or delayed.

The change must be supported by a proper cost segregation study prepared by qualified engineers or specialists who follow IRS audit techniques. The study provides the component breakdown and depreciation schedules necessary to justify the new method and calculate the adjustment. A poor quality or inadequate study cannot support a valid Form 3115 filing.

Property owners should begin the cost segregation and Form 3115 process as early as possible, ideally several months before the tax filing deadline. Completing a detailed cost segregation study can take 4 to 8 weeks depending on property complexity, and the CPA needs additional time to prepare Form 3115, calculate the Section 481(a) adjustment, and integrate everything into the tax return.

Filing an extension is highly recommended when implementing cost segregation, particularly for the first time or on complex properties. The extension provides additional time for study completion, form preparation, and review without risking the deadline. Most experienced practitioners routinely extend returns when cost segregation is planned to ensure adequate time for proper execution.

Taxpayers should coordinate closely between the cost segregation provider and their CPA or tax preparer. The study results must be communicated to the CPA in sufficient time to complete Form 3115 and prepare the return. Last minute delivery of the study can create timing pressure and increase error risk. Clear communication and established deadlines help ensure smooth execution.

For properties where the decision to pursue cost segregation is made late in the tax year, taxpayers should evaluate whether there is sufficient time to complete the process before the deadline or whether it makes more sense to designate the following year as the year of change. Rushing the process to meet a deadline can result in errors, incomplete documentation, or missed procedural requirements that jeopardize the entire benefit. Many owners implementing lookback cost segregation studies benefit from planning early to meet all timing requirements.