PLR 200048029: Foreign entity gets more time for disregarded entity election

Plain-English summary

A foreign entity missed the deadline to file Form 8832 electing to be disregarded as separate from its owner for federal tax purposes. The IRS found that the submitted facts and representations satisfied the standards for regulatory election relief. It granted 60 days from the date of the letter to file a properly executed Form 8832, effective as of the entity's formation date. The entity must attach a copy of the letter to the election. The ruling gives no opinion on other federal tax consequences.

Ruling snapshot

• Question: May the foreign entity make a late election to be disregarded from its owner?
• Outcome: Approved: a 60-day extension from the letter date.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200048029
Washington, DC 20224
Release Date: 12/1/2000
Index Number: 9100.31-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:Br.1-PLR-105608-00
Date:
August 30, 2000

X =

Country=

Date 1 =

This letter responds to your letter written on behalf of X, submitted on March 8, 2000, requesting an extension of time to elect to treat X as an entity that is disregarded as an entity separate from its owner for federal tax purposes.

FACTS

X is a Country entity that was organized on Date 1. X is an entity that is eligible to elect, under section 301.7701-(3)(c) of the Procedure and Administration Regulations, to be disregarded as an entity separate from its owner for federal income tax purposes. However, the Form 8832 Entity Classification Election, was not timely filed.

LAW AND ANALYSIS

Section 301.7701-3(b)(2) provides guidance on the classification of a foreign eligible entity for federal tax purposes. Generally, a foreign eligible entity is treated as an association taxable as a corporation if all members have limited liability, unless the entity makes an election to be treated otherwise. If a foreign eligible entity has one owner, it may elect to be taxable as an entity that is disregarded as an entity separate from its owner pursuant to the rules in section 301.7701-3(c). Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to 75 days prior to the date the form is filed or up to 12 months after the date on which the form is filed.

Under section 301.9100-1(c), the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than six months except in the case of a taxpayer who is abroad), under all subtitles of the Code except subtitles E, G, H and I, if the taxpayer demonstrates to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting the relief will not prejudice the interests of the government. Section 301.9100-

2
PLR-105608-00

1(b) defines the term “regulatory election” as including an election whose deadline is prescribed by a notice published in the Internal Revenue Bulletin.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make an election. Section 301.9100-1(a). Section 301.9100-2 provides automatic extension of time for making certain elections but does not apply to elections under 301.9100-3. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of section 301.9100-2. Requests for relief under section 301-9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the Government. Section 301.9100-3(a).

CONCLUSIONS

Based solely on the facts submitted and the representations made, the requirements of sections 301.9100-1 and 301.9100-3 have been satisfied. As a result, X is granted an extension of time of sixty (60) days from the date of this letter to make an election to treat X as an entity that is disregarded from its owner effective Date 1. X should make the election by filing a properly executed Form 8832 and attaching a copy of this letter to the election. A copy is enclosed for that purpose.

Except as specifically set forth above, no opinion is expressed or implied concerning the federal tax consequences of the facts described above under any other provision of the Code.

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

Pursuant to the power of attorney on file with this office a copy of this letter is being sent to the taxpayer and the second listed authorized representative.

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