PLR 200502003: Late controlled foreign corporation election receives filing relief

Plain-English summary

A taxpayer inadvertently failed to file an election statement for its controlled foreign corporation under the foreign base company income rules. It requested more time to make the regulatory election. The IRS concluded that the taxpayer met the requirements for discretionary filing relief under Treas. Reg. § 301.9100-3 and gave it 45 days from the ruling date to file the statement. The IRS did not determine whether the taxpayer was otherwise eligible to make the election.

Ruling snapshot

• Question: Could the taxpayer file a late election statement under Treas. Reg. § 1.954-2(g)(3)?
• Outcome: Approved: 45 days from the ruling date to file the statement.
• Key authorities: IRC § 954; Treas. Reg. §§ 1.954-2(g)(3), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200502003
Release Date: 01/14/2005
Index Number: 9100.22-00, 954.00-00

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Person To Contact:
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Refer Reply To:
CC:INTL – PLR-104520-03
In Re: Date:
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September 28, 2004
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LEGEND

Taxpayer = ----------------------------------------------------------------------------------------------
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Individual = --------------------
A
Tax year Y = -------
CFC = --------------------------------------

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

This replies to a letter dated January 8, 2003, in which Taxpayer requests an extension of time under Treas. Reg. § 301.9100-3 to file the election statement described in
§ 1.954-2(g)(3) with respect to CFC for tax year Y. Additional information was submitted in a letter dated August 12, 2003, and August 6, 2004. The information submitted for consideration is substantially as set forth below.

The ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. This office has not verified any of the material submitted in support of the request for a ruling. Verification of the factual information, representations, and other data may be required as a part of the audit process.

Individual A is the vice president of Taxpayer’s worldwide tax services. The affidavit of Individual A and the facts submitted describe the circumstances that led to the discovery that Taxpayer had inadvertently failed to file the election statement described in § 1.954-2(g)(3) for tax year Y. Taxpayer believes that it has acted reasonably and in good faith because the IRS did not discover the failure to file the election statement prior to Taxpayer requesting relief.
PLR-104520-03
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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 § 301.9100-3 to make a regulatory election under all subtitles of 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
§ 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 election statement described in § 1.954-2(g)(3) is a regulatory election within the meaning of § 301.9100-1(b). Therefore, the Commissioner has discretionary authority under § 301.9100–1(c) to grant Taxpayer an extension of time, provided that Taxpayer satisfies the standards set forth in
§ 301.9100-3(a).

Based on the facts and circumstances of this case, we conclude that Taxpayer satisfies
§ 301.9100-3(a). Accordingly, Taxpayer is granted an extension of time until 45 days from the date of this ruling letter to file the election statement described in § 1.954- 2(g)(3) with respect to CFC for tax year Y.

As provided in § 301-9100-1(a), the granting of an extension of time is not a determination that Taxpayer is otherwise eligible to file the election statement.

This ruling is directed only to the taxpayer who requested it. I.R.C. § 6110(k)(3) provides that it may not be used or cited as precedent.

A copy of this ruling letter should be associated with the election statement.

No ruling has been requested, and none is expressed, as to the application of any other section of the Code or regulations to the facts presented.
PLR-104520-03
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Pursuant to a power of attorney on file in this office, a copy of this ruling letter is being furnished to Taxpayer and to your other authorized representative.

Sincerely,

Associate Chief Counsel (International)

By: /s/ Allen Goldstein
Allen Goldstein
Reviewer

Attachment
Copy for 6110 purposes