PLR 200924012: Foreign entity received more time to elect corporate classification

Plain-English summary

A foreign eligible entity intended to be classified as an association taxable as a corporation from its formation date, but did not timely file Form 8832. The IRS found that the entity met the standards for discretionary late-election relief. It granted 60 days to file Form 8832 with a copy of the ruling and use the requested effective date. The entity and its shareholders also had to file any required returns or amended returns within the same period. Failure to meet that condition would make the ruling void.

Ruling snapshot

• Question: Could the foreign entity make a late election to be treated as a corporation from its formation date?
• Outcome: Approved, subject to filing the election and related returns within 60 days
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200924012
Third Party Communication: None
Release Date: 6/12/2009
Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00
Person To Contact:
------------------------------------------------------------ -----------, ID No. ------------
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Telephone Number:
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Refer Reply To:
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CC:PSI:B01
-------------------------------------------------------- PLR-138953-08 Date: March 4, 2009

Legend:

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

D = --------------------

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

This letter responds to the letter dated September 8, 2008, and related correspondence, written on behalf of X, requesting an extension of time under § 301.9100-1 and § 301.9100-3 of the Procedure and Administration Regulations to elect to be treated as an association taxable as a corporation for federal tax purposes.

FACTS

The information submitted states that X was a foreign eligible entity formed under the laws of Country on D. X intended to elect to be classified as an association taxable as a corporation for federal tax purposes, effective D. The Form 8832, Entity Classification Election, however, was not timely filed.

LAW AND ANALYSIS

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. Elections are necessary only when an
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eligible entity does not want to be classified under the default classification or when an eligible entity chooses to change its classification.

Section 301.7701-3(b)(2)(i) provides that, except for certain existing entities described in § 301.7701-3(b)(3), unless a foreign eligible entity elects otherwise, the 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 member that does not have limited liability.

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 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. The date specified on Form 8832 cannot be more than 75 days prior to the date on which the election is filed.

Under § 301.9100-1(c), 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 E, G, H, and I. Section 301.9100-1(b) defines the term "regulatory election" as including an election whose deadline is prescribed by a regulation published in the Federal Register.

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. Requests 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.

CONCLUSION

Based solely on the facts submitted and representations made, we conclude that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3 and, therefore, it is granted an extension of time of sixty (60) days from the date of this letter to file a Form 8832 to elect to be classified as an association taxable as a corporation for federal tax purposes, effective D. A copy of this letter should be attached to the election. A copy is enclosed for that purpose.
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This ruling is contingent on X and its shareholders filing all returns and amended returns as appropriate within 60 days of this letter to reflect any adjustments as a result of the election. If this condition is not met, then this ruling is null and void.

Except as specifically set forth above, we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the Internal Revenue 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.

In accordance with the Power of Attorney on file with this office, copies of this letter are being mailed to your authorized representatives.

Sincerely,

Curt G. Wilson

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

Enclosures (2)

Copy of this letter
Copy for ' 6110 purposes