PLR 200111042: Extension granted for foreign sales corporation election

Plain-English summary

A taxpayer missed the deadline to file Form 8279 to elect foreign sales corporation treatment. Its controller had copied the due date incorrectly onto an office board, and the error surfaced during tax return preparation. The IRS found that the taxpayer satisfied the requirements for discretionary filing relief: it acted reasonably and in good faith, and the extension would not prejudice the government. It granted 30 days from the ruling date to file the form. The ruling did not decide whether the taxpayer otherwise qualified for the election.

Ruling snapshot

• Question: Could the taxpayer receive more time to file its foreign sales corporation election after recording the wrong due date?
• Outcome: Approved, with a 30-day extension from the ruling date.
• Key authorities: Treas. Reg. §§ 301.9100-1, 301.9100-3, and 1.921-1T(b)(1), Q&A 1.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200111042
Washington, DC 20224
Release Date: 3/16/2001
Index Number: 9100.18-00
Person to Contact:
927.04-00
Telephone Number:

Refer Reply To:
CC:INTL:PLR-110299-00
Date:
December 19, 2000

LEGEND

Taxpayer
=
Individual A
=
CPA Firm
=
Date A
=
Date B
=
Date C
=

Dear :

This replies to a letter dated May 17, 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, for the tax year ended 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 and CPA Firm met regarding the creation of a foreign sales corporation. During the meeting, Individual A, the controller of Taxpayer, wrote down all the applicable deadlines, including the due date of Form 8279 as set by § 1.921- 1T(b)(1), Q&A 1. It was also decided at the meeting that Individual A would file Form 8279 on behalf of Taxpayer.

Individual A returned to his office and rewrote the steps and due dates on a board in his office. However, Individual A mistakenly wrote Date C as the due date of Form 8279, instead of Date B as the due date, which was thirty days earlier than Date C. Later, during a phone conversation between Taxpayer and CPA Firm regarding the Form 1120-FSC return preparation process, it was discovered that Form 8279 had not been filed on time due to the wrong due date mistakenly written on the board. 2

In re: PLR-110299-00

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

Treas. Reg. § 301.9100-3 provides rules 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 for the tax year ended on Date A. The granting of an extension of time to file Form 8279 is not a determination that Taxpayer is otherwise eligible to file Form 8279. § 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.

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

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