PLR 200130026: Foreign entity gets more time to elect partnership classification

Plain-English summary

A foreign entity intended to elect partnership classification for federal tax purposes, but did not file Form 8832 on time. The IRS found that it met the regulatory requirements for an extension and gave it 60 days from the letter's date to file a properly executed Form 8832. The election could use the entity's requested effective date, and the entity had to attach a copy of the ruling. The decision addresses the filing deadline for an entity classification election under Treas. Reg. § 301.7701-3.

Ruling snapshot

• Question: Could the foreign entity file its partnership classification election after the usual deadline?
• Outcome: Approved, with a 60-day deadline to file Form 8832 and attach the ruling.
• 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: 200130026
Washington, DC 20224
Release Date: 7/27/2001
Index Number: 9100.31-00, 7701.31-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:Br.1-PLR-106341-01
Date:
April 30, 2001

X =
Country =
Date 1 =
Date 2 =

This letter responds to a letter dated January 24, 2001, written on behalf of X, requesting a ruling, under sections 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations, that X be granted an extension of time for making an election to be treated as an partnership for federal tax purposes.

FACTS

According to the information submitted, X, a foreign entity, was organized under the laws of Country on Date 1. X intended to elect to be treated as a partnership for federal tax purposes as of Date 2. However, Form 8832, Entity Classification Election, was not timely filed.

LAW AND ANALYSIS

Section 301.7701-3(a) provides, in part, that a business entity that is not classified as a corporation under section 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an eligible entity) can elect its classification for federal tax purposes as provided in this section. An eligible entity with at least two members can elect to be classified as either an association (and thus a corporation under section 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(b)(2)(i) provides, in part, that unless a foreign eligible entity elects otherwise it is an association if all members have limited liability.

Section 301.7701-3(c)(1)(i) provides, in part, that an eligible entity may elect to be classified other than as provided under section 301.7701-3(b) by filing Form 8832, Entity Classification Election, with the service center designated on the form.

Section 301.7701-3(c)(1)(iii) provides, in part, that an election made under section 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified on the election form. The effective

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PLR-106341-01

date specified on Form 8832 can not be more than 75 days prior to the date on which the election is filed and can not be more than 12 months after the date on which the election 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.

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. 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 file a properly executed Form 8832 with the appropriate service center, effective Date 2. A copy of this letter should be attached to the election.

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 first and 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