PLR 200006036: Extension granted for branch liabilities election

Plain-English summary

The employee gathering information for a taxpayer's U.S. return died suddenly, and the taxpayer could not find a qualified replacement in time to file the return and make an election to reduce its U.S. liabilities under Treasury Regulation section 1.884-1(e)(3). The IRS found that the taxpayer met the standards for discretionary election relief under section 301.9100-3. It granted 30 days from the ruling date to make the election. The ruling expressly did not address the tax consequences of filing the return late.

Ruling snapshot

• Question: May the taxpayer make its election to reduce U.S. liabilities after the deadline?
• Outcome: Approved: a 30 day extension for the election
• Key authorities: Treas. Reg. §§ 1.884-1(e)(3) and 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Index Number: 9100.22-00
Washington, DC 20224
884.09-00
Number: 200006036
Person to Contact:
Release Date: 2/11/2000
Telephone Number:

Refer Reply To:
CC:INTL:PLR-109076-99
Date:
November 12, 1999

LEGEND
Taxpayer
=

Year One
=

Employee A
=

Dear

This replies to your letter dated April 26, 1999, in which Taxpayer requests an extension of time under Treas. Reg. § 301.9100-3 to make an election under § 1.884-1(e)(3) to reduce its U.S. liabilities. Additional information was submitted in letters dated September 2, 10, and 23, 1999. The information submitted for consideration is substantially as set forth below.

The ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. This office has not verified any of the material submitted in support of the request for a ruling. Verification of the factual information, representations, and other data may be required as a part of the audit process.

Employee A who worked alone in gathering information necessary for the preparation of Taxpayer’s tax return died suddenly. Because of a lengthy delay in finding a qualified replacement for Employee A, Taxpayer was unable to timely file its U.S. tax return for Year One. Therefore, Taxpayer was unable to make a timely election under § 1.884- 1(e)(3). Taxpayer is requesting relief to make the election under § 1.884-1(e)(3) before the failure to make the election is discovered by the IRS.

Treas. Reg. § 301.9100-1(c) provides that the Commissioner has discretion to grant a reasonable extension of time under the standards set forth in § 301.9100-3 to make a regulatory election under all subtitles of the Internal Revenue Code except subtitles E, G, H, and I.

2

PLR-109076-99

Treas. Reg. § 301.9100 -1(b) defines a regulatory election as an election whose due date is prescribed by a regulation, a revenue ruling, revenue procedure, notice, or announcement.

Treas. Reg. § 301.9100-3 provides standards for extensions of time for making regulatory elections when the deadline for making the election is other than a due date prescribed by statute.

Treas. Reg. § 301.9100-3(a) provides that requests for relief subject to this section will be granted when the taxpayer provides the evidence (including affidavits described in
§ 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

In the present situation, § 1.884-1(e)(3) fixes the time to make the election. Therefore, the Commissioner has discretionary authority under § 301.9100–1(c) to grant Taxpayer an extension of time, provided that Taxpayer satisfies the standards set forth in
§ 301.9100-3(a).

Based on the facts and circumstances of this case, we conclude that Taxpayer satisfies
§ 301.9100-3(a). Accordingly, Taxpayer is granted an extension of time until 30 days from the date of this ruling letter to make an election under § 1.884-1(e)(3) to reduce its U.S. liabilities.

No ruling has been requested, and none is expressed, as to the application of any other section of the Code or regulations to the facts presented. It specifically should be noted that this ruling will have no effect whatsoever as to the Federal income tax consequences relating to the late filing of Taxpayer’s tax return.

A copy of this ruling letter should be associated with the election.

This ruling is directed only to the taxpayer who requested it. I.R.C. § 6110(k)(3) provides that it may not be used or cited as precedent.

Pursuant to a power of attorney on file in this office, a copy of this ruling letter is being sent to your authorized representatives. Sincerely,
/s/ Allen Goldstein, Reviewer
Office of the Associate Chief Counsel (International)