PLR 200040029: Late foreign sales corporation election receives filing extension

Plain-English summary

A newly incorporated company missed the deadline to file Form 8279 to elect foreign sales corporation treatment. Its parent and tax adviser each thought the other would file the form, and the IRS had not discovered the omission. The IRS found that the company met the good faith and government interest standards for relief under Treasury Regulation section 301.9100-3. It granted 30 days from the ruling date to file the election for the stated tax year. The extension did not decide whether the company otherwise qualified as a foreign sales corporation.

Ruling snapshot

• Question: Could the company file its foreign sales corporation election after the prescribed deadline?
• Outcome: Approved; the company received 30 days from the ruling date to file Form 8279.
• Key authorities: Temp. Treas. Reg. § 1.921-1T(b)(1); Treas. Reg. §§ 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Index Number: 9100.18-00
Washington, DC 20224
927.04-00
Number: 200040029
Person to Contact:
Release Date: 10/6/2000
Telephone Number:

Refer Reply To:
CC:INTL:PLR-103831-00
Date:
July 11, 2000

LEGEND

Taxpayer
=
Parent
=
CPA Firm
=
Country B =
Date A
=

Dear :

This replies to a letter dated January 6, 2000, 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.

Prior to Date A, CPA Firm provided tax consulting services to Parent, the parent of Taxpayer, and assisted Parent in understanding the benefits and requirements of establishing a foreign sales corporation. On Date A, Taxpayer was incorporated in Country B. About ten months after Date A, it was discovered that Form 8279 had not been filed. The failure to timely file Form 8279 was due to a misunderstanding between CPA Firm and Parent as each believed that the other party would file the Form. The IRS has not discovered Taxpayer’s failure to timely file 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-103831-00

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. The granting of an extension of time to file Form 8279 is not a determination that Taxpayer is otherwise eligible to make the election. § 301.9100- 1(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. Further, no opinion is expressed as to whether the Taxpayer qualifies as a FSC or small FSC under U.S. law.

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

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