PLR 200841014: Foreign entity receives 60 days to file late classification election

Plain-English summary

A domestic limited partnership indirectly owned all interests in a foreign entity whose default federal tax status was an association taxable as a corporation. The foreign entity intended from its formation date to be treated as disregarded from its owner but did not timely file Form 8832. The IRS concluded from the submitted information and representations that the entity met the standards for discretionary filing relief. It granted 60 days from the ruling date to file Form 8832 and make the disregarded-entity election effective as of the intended date.

Ruling snapshot

• Question: May the foreign entity file a late Form 8832 electing disregarded-entity status effective from its formation date?
• Outcome: Approved. The entity received 60 days from the ruling date to file the election.
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200841014
Third Party Communication: None
Release Date: 10/10/2008
Date of Communication: Not Applicable
Index Number: 9100.31-00, 7701.00-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:PSI:02
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PLR-105856-08
Date:
June 26, 2008

LEGEND:

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

This responds to a letter dated January 30, 2008, and an additional correspondence submitted on behalf of Z, requesting that the Service grant Z an extension of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations to make an election to be treated as a disregarded entity.

Y is a State limited partnership classified as a partnership for Federal tax purposes. Y indirectly owns all of the interests in Z which was organized under Country law on Date 1. Z’s default status was as an association taxable as a corporation for Federal tax purposes. Z intended to be classified as a disregarded entity for Federal tax purposes effective Date 1 but 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.
PLR-105856-08
2

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)(C), except as provided in § 301.7701-3(b)(3), unless it elects otherwise, a foreign eligible entity is disregarded as an entity separate from its owner if it has a single owner that does not have limited liability.

Section 301.7701-3(b)(2)(ii) provides that for purposes of § 301.7701-3(b)(2)(i), a member of a foreign eligible entity has limited liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member.

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 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 301.9100-3 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 the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government.

Based solely upon the information submitted and the representations made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a result, Z is granted an extension of time of sixty (60) days following the date of this letter to file Form 8832 and to elect to be treated as a disregarded entity for Federal tax purposes effective Date 1. A copy of this letter should be attached to the Form 8832.
PLR-105856-08
3

Except as specifically set forth above, we express no opinion concerning the Federal income tax consequences of the transactions described above under any other provision of the Code.

This ruling is directed only to the taxpayer(s) 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 Z’s authorized representative.

Sincerely,

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

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

cc: