PLR 200614017: Foreign entity gets time to elect corporate tax treatment

Plain-English summary

A foreign entity intended to elect treatment as an association taxable as a corporation from the date it was formed, but inadvertently missed the Form 8832 deadline. It requested an extension to make that entity classification election. The IRS found that it met the requirements for discretionary relief under Treasury Regulation section 301.9100-3. It gave the entity 60 days from the ruling date to file Form 8832 and elect corporate treatment effective on its formation date. The ruling did not address other federal tax consequences.

Ruling snapshot

• Question: Could the entity file a late corporate classification election effective from its formation date?
• Outcome: Approved a 60 day extension to file Form 8832.
• 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: 200614017
Release Date: 4/7/2006
Index Numbers: 9100.22-00

• Person To Contact:
  ------------------------------------- -----------------------------------------------------
  ------------------------------- ---------
  ------------------------ Telephone Number:
  --------------------- ---------------------
  -------------------------- Refer Reply To:
  CC:PSI:2 – PLR-143527-05
  Date:
  December 07, 2005

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

D1 = -------------------------

Dear ------------------------
This letter responds to a letter, dated July 13, 2005, and subsequent correspondence, submitted on behalf of X, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations for X to file an election to be treated as an association taxable as a corporation for federal tax purposes.

The information submitted states that X was formed on D1 pursuant to the laws of Country. X intended to elect to be an association taxable as a corporation for federal tax purposes effective D1. However, X inadvertently failed to timely file a Form 8832, Entity Classification Election.

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 as provided in § 301.7701-3. 2

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

Section 301.7701-3(c)(1)(iii) provides that an election under § 301.7701-3(c)(1)(i) will be effective on the date specified on Form 8832 or on the date filed if no such date is specified on the form. The effective date specified on Form 8832 cannot be more than 75 days prior to the date the form is filed and cannot be more than 12 months after the date on which the form is filed.

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a reasonable extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3, 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 a regulatory election to include an election whose due date is prescribed by a regulation published in the Federal Register.

Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections.

Section 301.9100-3 sets forth 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 on the facts submitted and representations made, we conclude that the requirements of § 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 Form 8832 and elect to be treated as an association taxable as a corporation for federal tax purposes 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 or implied as to the federal tax consequences of the transaction described above under any other provision of the Code.

This ruling is directed only to the taxpayer on whose behalf it was requested.
Section 6110(k)(3) provides that it may not be used or cited as precedent. 3

In accordance with 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