PLR 200831004: Foreign LLC gets late disregarded entity election relief

Plain-English summary

A foreign limited liability company intended to elect treatment as an entity disregarded from its owner for U.S. tax purposes. It inadvertently failed to file Form 8832 for the intended effective date. The IRS found that it met the standards for late election relief under Treasury Regulation § 301.9100-3. The company received 60 days from the ruling date to file Form 8832 with the requested effective date. It must attach a copy of the ruling to the form.

Ruling snapshot

• Question: Could a foreign LLC file its disregarded entity election after the deadline?
• 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: 200831004
Third Party Communication: None
Release Date: 8/1/2008
Date of Communication: Not Applicable
Person To Contact:
Index Number: 7701.00-00, 9100.31-00
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Telephone Number:
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Refer Reply To:
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PLR-103683-08
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Date:
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April 14, 2008

Legend:

X: --------------------------------------------

Date 1: -------------------------

Date 2: ----------------------

Country: --------

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

This responds to a letter dated January 23, 2008, and subsequent correspondence, submitted on behalf of X, requesting that the Internal Revenue Service grant X an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to elect under § 301.7701-3(a) to be classified as disregarded as an entity separate from its owner for federal tax purposes.

The information submitted states that X is a limited liability company formed on Date 1 under the laws of Country. X inadvertently failed to file a Form 8832, Entity Classification Election, electing to treat X as disregarded as an entity separate from its owner for federal tax purposes effective Date 2.
PLR-103683-08
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Section 301.7701-3(a) provides that a business entity that is not classified as a corporation under § 301.7707-2(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. A “business entity” is any entity recognized for federal tax purposes that is not properly classified as a trust under § 301.7701-4 or otherwise subject to special treatment under the Internal Revenue Code.

Section 301.7701-3(b)(2) provides guidance on the classification of a foreign entity for federal tax purposes. § 301.7707-3(b)(2)(i) generally provides that, unless it elects otherwise, a foreign eligible 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 (C) disregarded as an entity separate from its owner if it has a single owner that does not have limited liability.

Section 301.7701-3(c) provides that an eligible entity may elect to be classified other than as provided under § 301.7701-3(b) by filing Form 8832, Entity Classification Election. The effective date of the election cannot be more than seventy-five (75) days prior to the date the form is filed and cannot be more than twelve (12) months after the date on which the election is filed.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than 6 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 an election whose due date is prescribed by a regulation published in the Federal Register or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make the election. Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections. Section 301.9100-3 provides 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 solely on the information 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 file a Form 8832 with the appropriate service center to elect to be treated as disregarded as an entity separate from its owner for U.S. tax purposes effective Date 2. A copy of this letter should be attached to the Form 8832. A copy is enclosed for that purpose.
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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.

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.

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent to X’s authorized representative.

Sincerely,

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

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

cc: