PLR 200034014: Foreign entity granted more time to elect corporate classification

Plain-English summary

A foreign business and its owners intended to elect corporate treatment for U.S. tax purposes from the day the business began, but Form 8832 was not filed on time. The IRS found that the business met the standards for discretionary relief under the election deadline regulations. It gave the business 60 days from the ruling letter to file Form 8832 electing corporate classification effective from its original start date. The ruling did not address other tax consequences of the business's transactions.

Ruling snapshot

• Question: Could the foreign entity make a late election to be classified as a corporation from its start date?
• Outcome: Approved; Form 8832 had to be filed within 60 days of the letter.
• Key authorities: Treas. Reg. §§ 301.7701-3(b)(2), 301.7701-3(c), 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Index Number: 9100.31-00 Washington, DC 20224

Number: 200034014
Person to Contact:
Release Date: 8/25/2000
Telephone Number:

Refer Reply To:
CC:DOM:P&SI:Br.1-PLR-116062-99
Date:
May 24, 2000

Legend:

X
=

Y
=

Z
=

Country =

D1
=

This letter responds to your September 23, 1999 request for a private letter ruling, submitted on behalf of X, requesting an extension of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations to file an election to be treated as a corporation for federal income tax purposes under § 301.7701-3(c).

FACTS

According to the information submitted, X began doing business under Country law on D1. Further, X and X’s parents, Y and Z, intended from inception to elect to treat X as a corporation. However Form 8832, Entity Classification Election, was not timely filed.

LAW AND ANALYSIS

Section 301.7701-3(b)(2) classifies eligible foreign entities for federal tax purposes. This section classifies any foreign eligible entity which has two or more members, at least one of whom does not have limited liability, as a partnership, unless the entity elects otherwise.

Section 301.7701-3(c)(1)(i) allows an entity to elect to change its classification by filing Form 8832, Entity Classification Election, with the service center designated on that Form. Section 301.7701-3(c)(1)(iii) provides that all such elections become effective on the date specified by the entity on Form 8832 or on the date filed if no

2
PLR-116062-99

effective date is specified. The specified effective date must not be earlier than 75 days prior to the filing date of Form 8832, nor later than twelve months after that filing date.

Section 301.9100-1(c) gives the Commissioner discretion to grant reasonable extensions of time to make regulatory elections under the rules of §§ 301.9100-2 and 301.9100-3. Under § 301.9100-1(b), a regulatory election includes an election whose due date is prescribed by a regulation published in the Federal Register or a notice published in the Internal Revenue Bulletin.

Section 301.9100-3 sets forth the standards which the Commissioner uses to determine whether to grant a discretionary time extension. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides evidence proving to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the Government.

CONCLUSION

Based solely on the facts submitted and the representations made, we conclude that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, X is granted an extension of time for making the election to be treated as a corporation for federal tax purposes, effective D1, until 60 days following the date of this letter. X should make the election by filing Form 8832. A copy of this letter should be attached to that Form.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

This ruling is directed only to the taxpayer(s) requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to the taxpayer.

Sincerely,
Signed/Paul F. Kuger
Assistant Chief Counsel
(Passthroughs and Special Industries)
Enclosures (2)
Copy of this letter
Copy for section 6110 purposes