PLR 200921012: Foreign entity received relief for a late partnership election

Plain-English summary

A foreign eligible entity defaulted to association status but intended to be classified as a partnership from a specified date. It did not timely file Form 8832 to make that election. The IRS concluded from the submitted facts and representations that the entity satisfied the regulatory standards for late-election relief. It granted 60 days from the ruling date to file Form 8832 and elect partnership treatment effective on the intended date. The ruling did not address any other tax consequences.

Ruling snapshot

• Question: Could the foreign entity receive more time to elect partnership classification?
• Outcome: Approved: the entity received a 60-day extension to file Form 8832.
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1 through -3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200921012
Third Party Communication: None
Release Date: 5/22/2009
Date of Communication: Not Applicable
Person To Contact:
Index Number: 7701.00-00, 9100.31-00
--------------------, ID No. -------------
Telephone Number:
---------------------
--------------------------------------------------- Refer Reply To:
--------------------------------
CC:PSI:B02
--------------------------
PLR-137757-08
--------------------
Date:
--------------------------------------
January 29, 2009

X = ---------------------------------------------------------------------------------------------------
-----------------------

Country = ----------
---------------------------------------------------------------------------------------------------
D1 = ----------------

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

This is in response to a letter dated August 26, 2008 submitted by X requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an election to be classified as a partnership for federal tax purposes.

The information submitted states that X was formed under the laws of Country as an entity eligible to make a classification election. X’s default status for federal tax purposes was an association taxable as a corporation. X intended to be classified as a partnership for federal tax purposes effective D1. However, a Form 8832, Entity Classification Election, for X to elect to be treated as a partnership effective D1 was not timely filed.

Section 301.7701-2(a) generally provides that 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(a) provides that so long as a business entity is not classified as a corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), (8) (an eligible entity), it may elect its classification for federal tax purposes.
PLR-137757-08
2

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 taxable as a corporation if all members have limited liability, unless the entity makes an election to be treated otherwise.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be classified other than as provided under § 301.7701-3(b) by filing a Form 8832 with the appropriate service center. Under § 301.7701-3(c)(1)(iii), this election will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified on the election form. The date specified on Form 8832 cannot be more than 75 days prior to the date on which the election is filed and cannot be more than 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 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 the term regulatory election as including an election with a deadline prescribed by a regulation 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 an election. Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of § 301.9100-2.

Section 301.9100-3 provides that request 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.

Based solely on the facts submitted and representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. Accordingly, X is granted an extension of sixty (60) days from the date of this letter to elect to be classified as a partnership for federal tax purposes, effective D1. The election should be made by filing Form 8832 with the appropriate service center. A copy of this letter should be attached to the election.
PLR-137757-08
3

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) of the Internal Revenue Code provides that it may not be used or cited as precedent.

Sincerely,

Curt G. Wilson
Deputy Associate Chief Counsel
(Passthroughs & Special Industries)

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