PLR 200408023: Foreign company may file a late partnership election

Plain-English summary

A foreign limited liability company with two owners intended to be treated as a partnership for U.S. tax purposes from its formation date. It missed the deadline to file Form 8832, and its owners' limited liability meant it would otherwise be classified as a corporation. The IRS found that the company met the requirements for discretionary deadline relief. It gave the company 60 days from the ruling date to file Form 8832 and elect partnership treatment effective on the stated formation date. The IRS expressed no opinion on other tax consequences.

Ruling snapshot

• Question: May the foreign company file a late election for partnership classification?
• 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: 200408023
Release Date: 2/20/04
Index Number: 7701.00-00; 9100.31-00

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Person To Contact:
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Telephone Number:
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CC:PSI:2 – PLR-121726-03
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Date: November 14, 2003

Legend

X: ----------------
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A: --------------
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B: ----------------------
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Country: ----------

d1: -----------------

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

This responds to a letter dated March 17, 2003, and subsequent correspondence submitted on behalf of X by its authorized representative, requesting that the Service grant X an extension of time pursuant to § 301.9100 of the Procedure and Administration Regulations to file a Form 8832, Entity Classification Election, to elect under § 301.7701-3 to be a partnership for federal tax purposes effective d1.

The information submitted states that X, a Country limited liability company, was formed on d1. X is wholly owned by A and B. X represents that pursuant to § 301.7701-3(a), X is a foreign eligible entity that is not required to be classified as a corporation for federal tax purposes. All of the members of X have limited liability within the meaning of § 301.7701-3(b)(2)(ii). X intended to elect to be a partnership under

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§ 301.7701-3(c) effective d1. However, X inadvertently failed to timely file a Form 8832 to elect to be a partnership.

Section 301.7701-3(a) provides that a business 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 as provided in § 301.7701-3.

Section 301.7701-3(b)(2) provides guidance on the classification of a foreign entity for federal income 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.

Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to seventy-five (75) days prior to the date the form is filed or up to twelve (12) months after the date on which the form is filed.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than 6 months except in the case of a taxpayer who is abroad), under all subtitles of the Internal Revenue Code except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term “regulatory election” as an election whose due date is prescribed by a regulation published in the Federal Register or a revenue ruling, revenue procedure, notice, or announcement 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 the election.

Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections.

Section 301.9100-3 provides the standards the Commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good faith, and (2) granting relief will not prejudice the interests of the government.

Based solely on the information submitted and the representations made, we conclude that the requirements of § 301.9100-1 and § 301.9100-3 have been satisfied. As a result, X is granted an extension of time until 60 days from the date of this letter to elect to be a partnership for federal tax purposes effective d1, with the appropriate

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service center. X should make that election by filing Form 8832 with the relevant service center. A copy of this letter should be attached to the Form 8832. A copy is enclosed for that purpose.

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.

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.

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent to X’s authorized representative.

Sincerely,

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

Enclosures (2)
Copy of this letter
Copy for § 6110 purposes

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