PLR 200920002: Foreign entity received 60 days to file a late disregarded-entity election

Plain-English summary

A foreign eligible entity with one owner intended to elect disregarded-entity treatment for federal tax purposes as of a redacted date but did not make a timely election. The entity-classification regulations permit a single-owner eligible entity to choose disregarded status. Form 8832 normally cannot reach back more than 75 days from filing. The regulatory-relief rules allow more time when the taxpayer acted reasonably and in good faith and relief would not prejudice the government. Based on the submitted information and representations, the IRS found those standards satisfied. It granted 60 days from the ruling date to file Form 8832 for the requested effective date.

Ruling snapshot

• Question: Could the foreign single-owner eligible entity receive more time to file its intended disregarded-entity election?
• Outcome: Approved: the IRS granted 60 days from the ruling date to file Form 8832 for the redacted effective date.
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, 301.9100-2, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200920002
Third Party Communication: None
Release Date: 5/15/2009
Date of Communication: Not Applicable

Index Number: 9100.31-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
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Date:
December 17, 2008

X = ----------------------------------------------------
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Country = --------------
Date 1 = ----------------------------
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Dear ---------------:

This responds to a letter dated June 26, 2008, submitted on behalf of X, requesting that the Service grant X an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to make an entity classification election.

The information submitted states that X was formed under the laws of Country.
X represents that X is a foreign entity eligible to be treated as a disregarded entity. However, no timely election was made to elect to treat X as a disregarded entity effective Date 1.

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. 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 income tax purposes. Generally, a foreign eligible entity is treated as an association taxable as a corporation if all members have limited liability, unless the entity makes an election to be treated otherwise. If the foreign eligible entity has only one owner, it may elect to be treated as a disregarded entity pursuant to the rules in § 301.7701-3(c).
PLR-129720-08
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Section 301.7701-3(c) 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 and that an entity classification election must be filed on Form 8832 and can be effective up to seventy-five (75) days prior to the date the form is filed or up to twelve (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 301.9100-2 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 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 disregarded entity effective Date 1. A copy of this letter should be attached to the Form 8832. A copy is enclosed for that purpose.

Except as expressly provided herein, we express or imply no opinion concerning the federal 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) of the Code provides that it may not be used or cited as precedent.
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In accordance with a power of attorney on file with this office, a copy of this letter is being sent to X’s authorized representatives.

Sincerely,

Curt G. Wilson
Associate Chief Counsel
Office of Associate Chief Counsel
(Passthroughs and Special Industries)

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