PLR 200826012: Foreign entity may file late disregarded status election

Plain-English summary

A foreign entity represented that it was eligible to elect treatment as an entity disregarded from its owner. It planned for that classification to begin on a specified date but failed to file Form 8832 on time. The IRS found the requirements for late election relief satisfied and granted 60 days from the letter's date to file the form. The entity should attach a copy of the ruling to its election.

Ruling snapshot

• Question: May the foreign entity file a late disregarded entity election?
• Outcome: Approved, with 60 days 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: 200826012
Release Date: 6/27/2008
Index Number: 9100.31-00

Person To Contact:
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Refer Reply To:
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CC:PSI:2
PLR-141225-07
Date:
February 12, 2008

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

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

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

This letter responds to a letter, dated September 12, 2007, 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 a disregarded entity.

According to the information submitted, X is an entity formed under the laws of Country. X represents that it is a foreign entity eligible to elect to be treated as a disregarded entity. X intended to be treated as a disregarded entity for federal tax purposes, effective D1. However, X did not 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.

Section 301.7701-3(b)(2) provides guidance on the classification of a foreign eligible entity for federal tax purposes. Under § 301.7701-3(b)(2)(i)(B), except as provided in § 301.7701-3(b)(3), unless it elects otherwise, a foreign eligible entity is classified as an association if all members have limited liability. If the foreign eligible

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entity has only one owner, it may elect to be treated as a disregarded entity pursuant to the rules in § 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 seventy-five days prior to the date the form is filed or up to twelve 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 a disregarded entity for federal tax purposes effective D1. A copy of this letter should be attached to the Form 8832.

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.

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In accordance with the power of attorney on file with this office, copies of this letter are being sent to X’s authorized representatives.

Sincerely,

William P. O’Shea
Associate Chief Counsel
(Passthroughs and Special Industries)

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