PLR 200728023: Foreign entity gets more time to elect partnership treatment

Plain-English summary

A foreign entity intended to be classified as a partnership for U.S. tax purposes but missed the deadline to file Form 8832. It requested an extension under the regulatory election relief rules. The IRS found that the requirements for relief were met and gave it 60 days from the ruling date to file the election effective as of its requested date. The entity had to file a properly executed form and attach the ruling letter. The IRS did not rule on any other tax consequences.

Ruling snapshot

• Question: Could the entity file a late election to be treated as a partnership?
• Outcome: Approved a 60-day extension to file Form 8832.
• Key authorities: Treas. Reg. §§ 301.7701-3(c), 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200728023
Third Party Communication: None
Release Date: 7/13/2007
Date of Communication: Not Applicable

Person To Contact:
Index Numbers: 7701.00-00; 9100.31-00
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Telephone Number:
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Refer Reply To:
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CC:PSI:B01
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PLR-143257-06
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Date:
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March 23, 2007

LEGEND

X = -----------------------------------
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Month = ----------------------

D = -------------------

Country = ---------------------------

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

This is in response to a letter dated August 29, 2006, submitted on behalf of X, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an election under § 301.7701-3(c) to be treated as a partnership for federal tax purposes.

FACTS

According to the information submitted, X was formed in Month under the laws of Country. X intended to be treated as a partnership for federal tax purposes effective D. However, X inadvertently failed to timely file Form 8832, Entity Classification Election, to be treated as a partnership for federal tax purposes.
PLR-143257-06
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LAW AND ANALYSIS

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. An eligible entity with at least two members can elect to be classified as either an association or a partnership.

Section 301.7701-3(b)(2) provides guidance on the classification of a foreign eligible entity for federal tax purposes. Generally, a foreign eligible entity is treated as an association if all members have limited liability, unless the entity makes an election to be treated otherwise. A foreign eligible entity with two or more members having limited liability may elect to be treated as a partnership pursuant to the rules of § 301.7701- 3(c). Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to 75 days prior to the date the form is filed or up to 12 months after the date the form 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 Internal Revenue Code, except subtitles E, G, H, and I. Section 301-9100-1(b) defines the term "regulatory election" as including an election whose due date is prescribed by a regulation published in the Federal Register.

Sections 301.9100-1 through 301.9100-3 provide the standards that the Commissioner will use to determine whether to grant an extension of time to make an election. Section 301.9100-1(a).

Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides rules for requesting extensions of time for regulatory 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.

CONCLUSION

Based solely on the facts submitted and the 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 make an election to be treated as a p for federal tax purposes effective D. X should make the election by filing a properly executed Form 8832 with the appropriate service center. A copy of this letter should be attached to the form.
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Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

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.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representative.

Sincerely,

William P. O'Shea
Associate Chief Counsel
(Passthroughs & Special Industries)

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

cc: