PLR 200423007: Extension granted for dual consolidated loss certifications

Plain-English summary

A taxpayer omitted annual certifications for dual consolidated losses of three foreign hybrid entity separate units from a federal tax return. Its accounting firm later discovered the omission and sought discretionary filing relief. The IRS found the requirements of Treasury Regulation § 301.9100-3(a) satisfied and gave the taxpayer 45 days from the ruling's date to file the certifications described in the attached exhibit. The extension did not establish that the taxpayer was otherwise eligible to file them.

Ruling snapshot

• Question: Could the taxpayer file the omitted annual dual consolidated loss certifications late?
• Outcome: Approved: 45 additional days to file the certifications.
• Key authorities: Treas. Reg. §§ 1.1503-2(g)(2)(vi)(B), 301.9100-3(a).

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200423007
Release Date: 6/4/04
Index Number: 9100.22-00, 1503.04-00

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Person To Contact:
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------------------------, ID No. ------------
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Telephone Number:
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Refer Reply To:
In Re: ------------------------------------------ CC:INTL:B03 – PLR-114582-03
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Date:
February 27, 2004

TY: --------

Legend

Taxpayer = --------------------------------------------
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Individual A = -----------------------

CPA Firm = --------------------------

Tax Year A = ------------- ------

Tax Year B = -------------------

Date C = ------------------

Date D = --------------

Country X = ------------

Country Y = ---------------------

Country Z = ---------

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

This is in response to a letter dated February 18, 2003, in which Taxpayer requests an extension of time under Treas. Reg. §301.9100-3 to file the annual certification described in Treas. Reg. §1.1503-2(g)(2)(vi)(B) in accordance with Exhibit A, which is attached to and is made part of this ruling letter. The annual certification should have 2 PLR-114582-03

been attached to Taxpayer’s federal income tax return for Tax Year B which ended on Date C. The information submitted for consideration is substantially as set forth below.

The ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.

CPA Firm prepared Taxpayer’s United States federal income tax returns for Tax Year A and Tax Year B.

For Tax Year B, Taxpayer was required to file an annual certification for the dual consolidated losses (DCLs), as defined in Treas. Reg. §1.1503-2(c)(5), for its hybrid entity separate units, as defined in Treas. Reg. §1.1503-2(c)(4), located in Country X, Country Y and Country Z, for their Tax Year A DCLs. Individual A is a partner with CPA firm and has been providing tax services to Taxpayer since Date D. The affidavit of Individual A and the facts submitted shows that Individual A, subsequent to Tax Year B, discovered the inadvertent omission of the annual certification for the Tax Year A DCLs that should have been attached to the Taxpayer’s federal income tax return for Tax Year B. The CPA Firm recommended that relief under Treas. Reg. §301.9100-3 be sought.

Treas. Reg. §301.9100-1(b) provides that an election includes an application for relief in respect of tax, and defines a regulatory election as an election whose due date is prescribed by a regulation, a revenue ruling, revenue procedure, notice, or announcement.

Treas. Reg. §301.9100-1(c) provides that the Commissioner has discretion to grant a taxpayer a reasonable extension of time, under the rules set forth in Treas. Reg.
§301.9100-3, to make a regulatory election under all subtitles on the Internal Revenue Code, except subtitles E, G, H, and I.

Treas. Reg. §301.9100-3(a) provides that requests for relief subject to this section will be granted when the taxpayer provides the evidence (including affidavits described in Treas. Reg. §301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

In the present situation, the certification described in Treas. Reg. §1.1503-2(g)(2)(vi)(B) is a regulatory election as defined in Treas. Reg. §301.9100-1(b). Therefore, the Commissioner has the discretionary authority under Treas. Reg. §301.9100-1(c) to 3 PLR-114582-03

grant an extension of time, provided that the Taxpayer satisfies the rules set forth in Treas. Reg. §301.9100-3(a).

Based upon the facts and circumstances submitted, we conclude that Taxpayer satisfies Treas. Reg. §301.9100-3(a). Accordingly, Taxpayer is granted an extension of time of 45 days from the date of this ruling letter to file the annual certification in accordance with Exhibit A that should have been included in the Taxpayer’s federal income tax return for Tax Year B ending on Date C.

The granting of an extension of time is not a determination that Taxpayer is otherwise eligible to file the certifications. See Treas. Reg. §301.9100-1(a).

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

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.

A copy of this letter should be attached to any income tax return to which it is relevant.

Pursuant to a power of attorney on file in this office, a copy of this letter is being furnished to the Taxpayer.

Sincerely,

Allen Goldstein
Reviewer
Office of Associate Chief Counsel
(International)

Enclosure (1): Copy for 6110 purposes

CC --------------------------
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 4 PLR-114582-03

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EXHIBIT A

Extension of time requested to file Annual Certifications described in Treas. Reg. §1.1503-2(g)(2)(vi)(B) for the following DCLs:

Name of Hybrid Entity Separate Unit
Tax Year DCLs Incurred
Incurring DCLs

------------------------------------------------Tax Year A

---------------------------------------------------Tax Year A

------------------------------------------------------Tax Year A