How do I change my accounting period, and how does it affect when my returns are due?
An organization may change its accounting period by filing a return for the short tax period that results from the change. A "short tax period" is an accounting period of less than 12 months, and usually occurs when an organization starts operations, changes its accounting period or terminates.
For example: In the year it was created, "Organization EO" adopts a calendar year accounting period. In Year 4, it decides to change its accounting period to a fiscal year ending September 30. It may change its accounting period by filing a short tax period return for the year beginning January 1 and ending September 30, Year 4. It must write "Change in Accounting Period" at the top of this short Year 4 return. Organization EO's next return would cover the period beginning October 1, Year 4 and ending September 30, Year 5.
If the organization has already changed its accounting period within the last 10 calendar years, it must use Form 1128 , Application to Adopt, Change, or Retain a Tax Year, to change its accounting period. Form 1128 instructions explain how to complete and submit the request. A user fee no longer applies to a request for an accounting period change. The most up to date information may be found at Revenue Procedure 2020-5 (updated annually; see Section 14 and Appendix A - Schedule of User Fees).
Please note that an organization may not change its accounting period by filing a Form 990-N for the short tax period. The organization must either file a Form 990-EZ or Form 990, or use Form 1128.