PLR 200408022: Domestic LLC gets time to elect corporate tax treatment

Plain-English summary

The members of a domestic limited liability company intended to elect corporate tax treatment from a specified date. The IRS service center had no record of receiving the company's Form 8832, leaving the three-member company under the default partnership classification. The IRS concluded that the company satisfied the standards for discretionary deadline relief. It gave the company 60 days from the ruling date to file Form 8832 and elect to be taxed as a corporation effective on the requested date. The ruling addresses the filing extension only.

Ruling snapshot

• Question: May the LLC file a late election to be taxed as a corporation?
• Outcome: Approved: 60 days to file Form 8832 with the requested effective 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
Washington, DC 20224
Number: 200408022
Release Date: 2/20/04
Index Number: 9100.31-00

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Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B02 – PLR-144284-03
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Date:
November 14, 2003

LLC = ----------------------------------------------
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d1 = ----------------------

d2 = ------------------

State = ----------

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

This letter responds to your letter dated July 14, 2003, and subsequent correspondence, submitted on behalf of LLC, requesting an extension of time for LLC to elect under § 301.7701-3(c) of the Procedure and Administration Regulations to be treated as an association taxable as a corporation.

The information submitted states that LLC was organized on d1 as a domestic limited liability company under the laws of State with three members. The members of LLC intended to elect for LLC be treated as an association taxable as a corporation effective d2. However, the service center has no record of receiving a Form 8832, Entity Classification Election, for LLC.

Section 301.7701-3(a) provides that a business entity that is not classified as a corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an "eligible entity") can elect its classification for federal tax purposes. A “business entity” is any entity recognized for federal tax purposes that is not properly classified as a trust under § 301.7701-4 or otherwise subject to special treatment under the Internal Revenue Code. Section 301.7701-2(a). An eligible entity with at least two members can elect to

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either be classified as an association (and thus a corporation under § 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(b)(1)(i) provides that, unless it elects otherwise, a domestic eligible entity with two or more members will be classified as a partnership.

Section 301.7701-3(c)(1)(i) provides that to elect to be classified other than as provided in 301.7701-3(b), an eligible entity must file Form 8832 with the designated service center. Section 301.7701-3(c)(1)(iii) provides that an election made under § 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 date specified on Form 8832 cannot be more than 75 days prior to the date on which the election is filed and cannot be more than 12 months after the date on which the election is filed.

Section 301.9100-1(c) gives the Commissioner discretion to grant reasonable extensions of time to make regulatory elections under the rules of §§ 301.9100-2 and 301.9100-3. Under § 301.9100-1(b), a regulatory election includes an election whose due date is prescribed by a regulation published in the Federal Register, or a revenue ruling, revenue procedure, notice or an announcement published in the Internal Revenue Bulletin.

Section 301.9100-3 sets forth the standards which the Commissioner uses to determine whether to grant a discretionary extension of time. These standards indicate that the Commissioner should grant relief when the taxpayer provides evidence proving to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of Government.

Based on the information submitted and the representations made, we conclude that the requirements of ' 301.9100-3 have been satisfied. As a result, LLC is granted an extension of time of 60 days from the date of this letter to file a Form 8832 with the appropriate service center electing under § 301.7701-3(c) to be classified as an association taxable as a corporation for federal tax purposes effective d2. A copy of this letter should be attached to the Form 8832.

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

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This ruling is directed only to the taxpayer who requested 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