PLR 200403042: Entity gets 60 days to file late corporate classification election

Plain-English summary

An eligible business entity intended to elect federal tax treatment as an association taxable as a corporation from its formation date, but failed to file Form 8832 on time. The entity requested a discretionary filing extension under the regulatory election rules. Based on the submitted facts and representations, the IRS found the relief requirements satisfied and granted 60 days from the letter date to file the form with its intended effective date. The ruling does not address other federal income tax consequences.

Ruling snapshot

• Question: May the entity file a late Form 8832 electing corporate tax classification from its formation date?
• Outcome: Approved: 60 additional days to file the election.
• 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
Washington, DC 20224
Number: 200403042
Release Date: 01/16/2004
Index Number: 9100.31-00

• Person To Contact:
  ------------------- ----------------------, ID No. --------------

------------------------------------------- Telephone Number:
-------------------------------- ---------------------
Refer Reply To:
CC:PSI:B02 – PLR-135206-03
- Date:
October 9, 2003

Legend

X = ----------------------------
----------------------------------------------------

A = ------------------------------------
----------------------------------------------------

Date 1 = -----------------

Dear ----------------:

This responds to a letter dated June 2, 2003, submitted by X, requesting an extension under § 301.9100-3 of the Procedure and Administration Regulations for X to be treated as an association taxable as a corporation for federal tax purposes.

Facts

According to the information submitted, A formed X on Date 1. X intended to elect to be classified as an association taxable as a corporation for federal tax purposes effective Date 1, but inadvertently failed to timely file Form 8832, Entity Classification Election.
2

Law and Analysis

Section 301.7701-3(a) provides 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. An eligible entity with at least two owners can elect either to be classified as an association (and thus a corporation under § 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(b)(1) provides that an eligible entity with at least two owners will be classified as a partnership unless it elects otherwise.

Section 301.7701-3(c)(1)(i) allows an eligible entity to elect to change its classification by filing Form 8832, Entity Classification Election. Section 301.7701-3(c)(1)(iii) provides that all such elections become effective on the date specified by the entity on Form 8832 or on the date filed if no effective date is specified. The specified effective date must not be earlier than 75 days prior to the filing date of Form 8832, nor later than twelve months after the filing date.

Section 301.9100-1(c) gives the Commissioner discretion to grant reasonable extensions of time to make an election.

Section 301.9100-1 through § 301.9100-3 set forth the standards that the Commissioner uses to determine whether to grant a discretionary extension of time to make an election. Section 301.9100-1(a).

Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of § 301.9100-2.

Requests for relief under § 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).

Conclusion

Based solely on the information submitted and the representations made, we conclude that the requirements of section §§ 301.9100-1 and 301.9100-3 have been satisfied. Consequently, X is granted an extension of time of 60 days from the date of this letter to file Form 8832 with the appropriate service center electing under § 301- 7701-3(c) to be classified as an association taxable as corporation for federal tax 3

purposes effective Date1. A copy of this letter should be attached to that form. A copy is included for that purpose.

Except as expressly provided herein, we express or imply no opinion concerning the federal income tax consequences of the facts of this case under any other provision of the Code.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent.

Sincerely,

Heather C. Maloy
Associate Chief Counsel
(Passthroughs and Special Industries)

Enclosures (2):
Copy of this letter
Copy for section 6110 purposes