PLR 200046029: Late election under income allocation rules receives 30-day extension

Plain-English summary

A taxpayer missed the deadline for an election under Treas. Reg. § 1.861-8(e)(6)(ii)(D)(2). It said its qualified in-house tax professionals had failed to advise it to make the election. The IRS concluded that the taxpayer met the good-faith and government-prejudice standards for regulatory election relief. It granted 30 days from the ruling letter to make the election for the specified tax year. The IRS did not decide whether the taxpayer was otherwise eligible to make that election.

Ruling snapshot

• Question: May the taxpayer make a late election under Treas. Reg. § 1.861-8(e)(6)(ii)(D)(2)?
• Outcome: Approved: 30 days from the letter to make the election.
• Key authorities: Treas. Reg. §§ 1.861-8(e)(6)(ii)(D)(2), 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200046029
Washington, DC 20224
Release Date: 11/17/2000
Index Number: 9100.22-00
Person to Contact:
861.00-00
Telephone Number:

Refer Reply To:
CC:INTL:PLR-118871-99
Date:
August 22, 2000

LEGEND

Taxpayer
=

Individual A
=

Date A
=

Dear :

This replies to a letter dated October 19, 1999, in which Taxpayer requests an extension of time under Treas. Reg. § 301.9100-3 to elect § 1.861-8(e)(6)(ii)(D)(2) for the taxable year ended on Date A. Additional information was submitted in letters dated February 15, 2000 and June 13, 2000. 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 asserts it reasonably relied on qualified tax professionals employed by the Taxpayer and the tax professionals failed to advise Taxpayer to make the election.

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

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

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In re: PLR-118871-99

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, the election that is the subject of this ruling request is a regulatory election as defined in § 301.9100-1(b). 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 elect § 1.861-8(e)(6)(ii)(D)(2) for the taxable year ended on Date A. The granting of an extension of time 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.

Sincerely,

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