PLR 200422006: Late association classification election allowed

Plain-English summary

An entity formed under state law intended to elect association status for federal tax purposes from its formation date but inadvertently missed the Form 8832 deadline. The IRS found that the requirements for discretionary late-election relief were met. It allowed the entity 60 days from the letter date to file Form 8832 with the intended effective date. The letter describes the applicant as a corporation while discussing default partnership classification for a domestic entity with two members; it does not explain that difference. The ruling addressed the late filing only and did not decide other tax consequences.

Ruling snapshot

• Question: Could the entity file a late election to be taxed as an association from formation?
• Outcome: Approved, with Form 8832 due within 60 days.
• 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: 200422006
Release Date: 5/28/04
Index Number: 7701.00-00; 9100.31-00

------------------------------------------------- Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:2 – PLR-161300-03
Date:
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January 29, 2004

Legend

X: ----------------------
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State: -----------------

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

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

This responds to a letter from X’s authorized representative dated September 11, 2003, 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 be treated as an association taxable as a corporation for federal income tax purposes.

The information submitted states that X is a corporation formed under the laws of State on d1. X intended to elect under § 301.7701-3(c) to be treated as an association taxable as a corporation effective d1. However, X inadvertently failed to timely file a Form 8832, Entity Classification Election.

Section 301.7701-3(b)(1) provides guidance on the classification of a domestic eligible entity for federal tax purposes. Generally, a domestic eligible entity with two members is classified as a partnership unless the entity elects otherwise. To elect to be classified other than as provided in ' 301.7701-3(b), an eligible entity must file a Form 8832, with the service center designated on that form. 2 PLR-161300-03

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 of 60 days from the date of this letter to file a Form 8832 with the appropriate service center and elect to treat X as an association taxable as a corporation effective d1. 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 Internal Revenue Code.

This ruling is directed only to the taxpayer(s) requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent. 3 PLR-161300-03

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