PLR 200530022: Foreign partnership gets more time for entity classification election

Plain-English summary

A foreign limited partnership intended to be treated as a corporation for U.S. tax purposes from its formation date. It missed the deadline to file Form 8832 for that classification. The IRS found that the partnership met the requirements for late election relief under Treasury Regulation § 301.9100-3. It gave the partnership 60 days from the ruling date to file the election, effective as of its formation date. The ruling did not address other federal tax consequences.

Ruling snapshot

• Question: Could the partnership file a late Form 8832 election to be taxed as a corporation from its formation date?
• Outcome: Approved, with 60 days from the ruling date to file.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200530022
Release Date: 7/29/2005
Index Number: 9100.31-00

Person To Contact:
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Refer Reply To:
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CC:PSI:2 – PLR-163020-04
Date:
April 08, 2005

LEGEND:

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

Date 1 = ------------------

Dear -------------------

This letter responds to a letter dated November 24, 2004, and subsequent correspondence, submitted on behalf of X by its authorized representative, requesting a ruling under § 301.9100-3 of the Procedure and Administration Regulations, that X be granted an extension of time to elect under § 301.7701-3(a) to be classified as an association taxable as a corporation for federal tax purposes.

The information submitted states that X, a Country limited partnership, was formed on Date 1. X intended to be classified as an association taxable as a corporation for federal tax purposes, effective Date 1. However, no Form 8832, Entity Classification Election, was timely filed on behalf of X.

Section 301.7701-2(a) provides that 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.

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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.

Section 301.7701-3(b)(2)(i)(A) provides that unless the entity elects otherwise, a foreign eligible entity is a partnership if it has two or more members and at least one member does not have limited liability.

Section 301.7701-3(b)(2)(ii) provides that for purposes of § 301.7701-3(b)(2)(i), a member of a foreign eligible entity has limited liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be classified other than as provided under § 301.7701-3(b) by filing Form 8832 with the service center designated on the form.

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 the Form 8832 cannot be more than 75 days prior to the date on which the election is filed.

Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than six months except in the case of a taxpayer who is abroad), under all subtitles of the 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 an 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 an election. Section 301.9100-2 provides automatic extension of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of § 301.9100-2. Requests for relief under § 301.9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the Government.

Based solely on the facts submitted and the representations made, we conclude that X has satisfied the requirements of § 301.9100-3. As a result, X is granted an

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extension of time of sixty (60) days from the date of this letter to file a Form 8832 with the appropriate service center, electing to be treated as an association effective Date 1.

A copy of this letter should be attached to the election. A copy is enclosed for that purpose.

Except as specifically set forth above, no opinion is expressed or implied 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 who requested it. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent.

Pursuant to the 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 section 6110 purposes