PLR 200020054: Late foreign sales corporation election granted

Plain-English summary

A taxpayer and its accounting firm each assumed the other had filed Form 8279 to elect foreign sales corporation status. The taxpayer had filed its 1998 FSC return, but the IRS had no record of the election form. The IRS concluded that the taxpayer met the good faith and lack of government prejudice standards for late regulatory elections under Treas. Reg. § 301.9100-3(a). It gave the taxpayer 30 days from the ruling date to file Form 8279, effective for the tax year beginning on the redacted date.

Ruling snapshot

• Question: May the taxpayer file its FSC election after the regulatory deadline?
• Outcome: Approved, with Form 8279 due within 30 days of the ruling letter.
• Key authorities: Treas. Reg. §§ 301.9100-1(c), 301.9100-3(a), 1.921-1T(b)(1).

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Index Number: 9100.18-00
Washington, DC 20224
927.04-00
Number: 200020054
Person to Contact:
Release Date: 5/19/2000
Telephone Number:

Refer Reply To:
CC:INTL:PLR:114773-99
Date:
February 23, 2000

In re:

LEGEND

Taxpayer
=

CPA Firm
=

Date A
=

Dear :

This replies to a letter dated August 25, 1999, in which Taxpayer requests an extension of time under Treas. Reg. § 301.9100-3 to file Form 8279, Election To Be Treated as a FSC or as a Small FSC, pursuant to Temp. Treas. Reg. § 1.921-1T(b)(1), Q&A 1, effective for the tax year beginning on Date A. 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.

Taxpayer timely filed Form 1120 FSC for its 1998 tax year. Later, Taxpayer received a notice from the IRS stating it had no record of Taxpayer filing Form 8279. Taxpayer questioned its tax advisors, CPA Firm, about the IRS notice. CPA Firm reviewed the matter and determined that a mis-communication between CPA Firm and Taxpayer resulted in Form 8279 not being filed with the IRS as each assumed that the other had filed Form 8279.

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

2

In re: PLR:114773-99

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.

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, §1.921-1T(b)(1), Q&A 1, fixes the time to elect treatment as an FSC or small FSC. Thus, the Commissioner has discretionary authority pursuant to
§ 301.9100-1(c) to grant Taxpayer an extension of time, provided that Taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

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 file Form 8279 effective for the tax year beginning on Date A.

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.

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.

Pursuant to a power of attorney on file in this office, a copy of this letter is being sent to the Taxpayer and the other authorized representative.

Sincerely,

Allen Goldstein
Reviewer
Office of the Associate Chief Counsel (International)