PLR 200636095: Foreign entity gets extra time to elect partnership treatment

Plain-English summary

A foreign entity intended to be classified as a partnership from a specified date but did not file Form 8832 on time. The IRS concluded, based on the submitted facts and representations, that the entity met the standards for a discretionary filing extension under Treasury Regulation § 301.9100-3. It gave the entity 60 days from the letter to file the form electing partnership treatment effective on the requested date. The IRS directed the entity to attach a copy of the ruling letter to its election.

Ruling snapshot

• Question: May the foreign entity file a late Form 8832 electing partnership status from its intended effective date?
• Outcome: Approved; file within 60 days of the letter.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3.

Full text (IRS public release)

Number: 200636095
Release Date: 9/8/2006
Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Index Number: 9100.31-00

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Person To Contact:
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---------------------, ID No. 50-27249
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Telephone Number:
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Refer Reply To:
CC:PSI:B02 – PLR-164432-05
Date:
April 26, 2006

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

d1 = -----------------------

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

This letter responds to a letter dated December 21, 2005, submitted on behalf of X by its authorized representative, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to elect to be treated as a partnership under section 301.7701-3(c).

The information submitted states that X was formed under the laws of Country. X represents that X is a foreign entity eligible to elect to be treated as partnership and that X was intended to be classified as a partnership effective d1. However, Form 8832, Entity Classification Election, was not filed timely for X.

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) provides that, except for certain existing entities described in section 301.7701-3(b)(3), unless a foreign eligible entity elects otherwise, the entity is: (A) a partnership if it has two or more members and at least one member does not have limited liability; (B) an association if all members have limited liability; or 2
PLR-164432-05

(C) disregarded as an entity separate from its owner if it has a single member that does not have limited liability.

Section 301.7701-3(c)(1)(i) provides that to elect to be classified other than as provided in 301.7701-3(b), an eligible entity must file Form 8832 with the designated service center. 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 Form 8832 cannot be more than 75 days prior to the date on which the election is filed and cannot be more than 12 months after the date on which the election is filed.

Section 301.9100-1(c) gives the Commissioner discretion to grant reasonable extensions of time to make regulatory elections under the rules of §§ 301.9100-2 and 301.9100-3. Under § 301.9100-1(b), a regulatory election includes 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.

Section 301.9100-3 sets forth the standards which the Commissioner uses to determine whether to grant a discretionary extension of time. These standards indicate that the Commissioner should grant relief when the taxpayer provides evidence proving to the satisfaction of the Commissioner 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 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 a Form 8832 with the appropriate service center and elect to be treated as a partnership effective d1. A copy of this letter should be attached to the Form 8832. A copy is included for that purpose.

Except as specifically set forth above, no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the Code.
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This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

Sincerely,

Heather C. Maloy
Associate Chief Counsel
(Passthroughs & Special Industries)

Enclosure (2)
Copy of this letter
Copy for § 6110 purposes