PLR 200535013: Taxpayer gets time to file dual resident corporation forms

Plain-English summary

A taxpayer's senior tax officer had concluded that certain dual resident corporation filing requirements did not apply to its entities and tax years, then learned that conclusion was wrong. The taxpayer requested more time to file the elections, agreements, and annual certifications listed in an attached schedule. The IRS concluded that the taxpayer met the standards for discretionary relief and gave it 45 days from the ruling date to file. It expressly did not determine whether the taxpayer was otherwise eligible for those filings, including under rules concerning foreign mirror legislation.

Ruling snapshot

• Question: Could the taxpayer file late elections, agreements, and annual certifications under the dual resident corporation rules?
• Outcome: Approved: 45 days to make the listed filings.
• Key authorities: Treas. Reg. §§ 1.1503-2(g)(2), 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200535013
[Third Party Communication:
Release Date: 9/2/2005
Date of Communication: Month DD, YYYY]
Index Number: 9100.22-00, 1503.04-04
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:INTL
In Re:
PLR-156352-03
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Date:
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June 03, 2005
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LEGEND

Individual A = ---------------------
Foreign country X = ------------
Foreign country Y = ------------
Entity One = ------------------------------------------
Entity Two = --------------------------
Entity Three = ------------------------------------

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

This replies to a letter dated September 24, 2003, in which Taxpayer requests an extension of time under Treas. Reg. §301.9100-3 to file the election and agreement described in §1.1503-2(g)(2)(i), and the annual certification described in §1.1503- 2(g)(2)(vi) in accordance with Schedule A, which is attached to and made a part of this ruling letter. Additional information was submitted in letters dated November 11, 2003, February 17, 2004, September 2, 2004, and May 9, 2005. 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.

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Individual A is a senior vice-president of taxes for Taxpayer. In that capacity, Individual A is responsible for the preparation, signing and filing of Taxpayer’s consolidated federal income tax returns, including the filing of appropriate elections, forms and schedules. The facts submitted and the affidavit of Individual A show that Taxpayer relied on Individual A with respect to these tax matters, and that Individual A had concluded that Taxpayer was not subject to the reporting requirements of
§1.1503-2(g)(2) for the tax years at issue. However, as the result of a subsequent review of the matter, Individual A determined that his prior conclusions were incorrect.

Taxpayer represents that the income tax laws of foreign country X do not deny the use of losses, expenses, or deductions of Entity One to offset income of another person because the dual resident corporation or separate unit is also subject to income taxation by another country on its worldwide income or on a residence basis.

Taxpayer represents that the income tax laws of foreign country Y do not deny the use of losses, expenses, or deductions of Entity Two and Entity Three to offset income of another person because the dual resident corporation or separate unit is also subject to income taxation by another country on its worldwide income or on a residence basis.

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 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 within the meaning of § 301.9100-3(b), subject to the conditions set forth in § 301.9100-3(b)(3), and the grant of relief will not prejudice the interests of the Government within the meaning of § 301.9100-3(c).

In the present situation, the election and agreement described in § 1.1503-2(g)(2)(i), and the annual certification described in § 1.1503-2(g)(2)(vi) are regulatory elections as defined in § 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 for relief as set forth in § 301.9100-3.

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Based on the facts and information submitted, we conclude that Taxpayer satisfies
§ 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 election and agreement described in §1.1503- 2(g)(2)(i), and the annual certification described in § 1.1503-2(g)(2)(vi) in accordance with Schedule A.

The granting of an extension of time is not a determination that Taxpayer is otherwise eligible to file the elections and agreements, and the annual certifications. § 301.9100- 1(a). For example, a taxpayer that is subject to mirror legislation enacted by a foreign country may be ineligible to file the election agreement pursuant to §1.1503-2(c)(15)(iv).

A copy of this ruling letter should be associated with the elections and agreements, and the annual certifications.

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.

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.

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

Sincerely,

Associate Chief Counsel (International)

By:
Allen Goldstein
Reviewer

Enclosure:
Copy for 6110 purposes
Schedule A

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SCHEDULE A

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