PLR 201002033: Authority granted more time to file a private-activity-bond carryforward election

Plain-English summary

The IRS granted a nonprofit issuing authority an extension of time to file Form 8328 and carry forward unused private activity bond volume cap. The authority had applied to its state department for the carryforward, but the form was not filed because responsible personnel left and the authority and department misunderstood which entity would file it. The IRS concluded that the authority acted reasonably and in good faith, and that granting relief would not prejudice the government because the IRS had not discovered the missed filing. The authority was given 45 days from the date of the letter to file the form.

Ruling snapshot

• Question: May the authority receive an extension of time to file Form 8328 for a private-activity-bond volume-cap carryforward election?
• Outcome: Approved
• Key authorities: IRC § 146(f); Treas. Reg. §§ 301.9100-1 and 301.9100-3; Rev. Proc. 2005-30; Notice 89-12

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201002033
Third Party Communication: None
Release Date: 1/15/2010
Date of Communication: Not Applicable
Index Number: 146.00-00, 146.07-00,
9100.00-00, 9100.03-00
Person To Contact:
----------------, ID No. -------------
---------------------------------------
Telephone Number:
-------------
--------------------
----------------------------------------------------- Refer Reply To:
----------------------
CC:FIP:BR5
--------------------------------------------------- PLR-142443-09
--
Date:
September 30, 2009

LEGEND:

Authority = ------------------------------------------------------------
------------------------------------------------------------

State = ------------------------

Department = ---------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------

a = ---------------

Year 1 = -------

Year 2 = -------

Date 1 = --------------------------

Date 2 = ------------------------

Date 3 = -------------------------

Date 4 = ---------------------------

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

This is in response to your request for an extension of time under §301.9100-1 of the Procedure and Administration Regulations to file Form 8328 (Carryforward Election of Unused Private Activity Bond Volume Cap) for Authority to make a carryforward election
PLR-142443-09
2

under § 146(f) of the Internal Revenue Code with respect to $a of unused private activity bond volume cap from Year 1.

Facts and Representations

You make the following factual representations. Authority is a nonprofit corporation organized under the laws of State. Authority is authorized to issue qualified student loan bonds described in § 144(b).

Department administers the system established by State pursuant to § 146(e) to allocate State’s private activity bond volume cap. On Date 1, Authority made an application with Department for a carryforward under state law of unused volume cap from Year 1 for use by Authority in Year 2. On Date 2, Department awarded Authority a carryforward in the amount of $a for use in Year 2.

Due to the departure late in Year 1 of Authority personnel responsible for filing the Form 8328 with the Internal Revenue Service, and a miscommunication between Authority and Department regarding which entity would file the Form 8328, unbeknownst to both entities the Form 8328 was never filed.

On or about Date 3, legal counsel for Authority discovered that the Form 8328 pertaining to Authority’s carryforward from Year 1 of $a of volume cap had not been timely filed. Shortly thereafter, on Date 4, Authority submitted a ruling request for an extension of time to file a Form 8328 electing to carryforward the $a of Year 1 volume cap. As of Date 4, the IRS had not discovered Authority’s failure to timely file the Form 8328.

Law and Analysis

Section 146(f)(1) provides that if an issuing authority’s volume cap for any calendar year after 1985 exceeds the aggregate amount of tax-exempt private activity bonds issued during the calendar year (by the authority), the authority may elect to treat all (or any portion) of the excess as a carryforward for one or more carryforward purposes.

The election is made by filing Form 8328 with the Internal Revenue Service Center, Ogden, UT 84201. Under Notice 89-12, 1989-1 C.B. 633, Form 8328 must be filed by the earlier of (1) February 15 of the calendar year following the year in which the excess amount arises, or (2) the date of issue of bonds issued pursuant to the carryforward election. The automatic extension of time to file Form 8328, set forth in Revenue Procedure 2005-30, 2005-1 C.B. 1148, does not apply in this case.

The election must identify the purpose for which the carryforward is elected, and specify the amount to be carried forward for that purpose. Section 146(f)(2). Carryforward
PLR-142443-09
3

elections (and any identifications or specifications stated therein) are irrevocable. Section 146(f)(4).

Section 301.9100-1 of the Procedure and Administration Regulations provides, in part, that the Commissioner has discretion to grant a reasonable extension of time to make a regulatory election (defined in § 301.9100-1(b) as an election whose due date is prescribed by regulations published in the Federal Register, or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin), 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 301.9100-3(a) provides that requests for extensions of time for regulatory elections that do not meet the requirements for automatic extensions in § 301.9100-2, must be made under the rules of § 301.9100-3. Requests for relief will be granted if the taxpayer provides evidence establishing to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that the grant of relief will not prejudice the interests of the Government.

Section 301.9100-3(b)(1) provides, in part, that the taxpayer is generally deemed to have acted reasonably and in good faith if the taxpayer requested relief under that section before the failure to make the regulatory election is discovered by the IRS.

Section 301.9100-3(c)(1)(i) provides, in part, that the interests of the Government are prejudiced if granting relief would result in a taxpayer having a lower tax liability than the taxpayer would have had if the election had been timely (taking into account the time value of money).

Conclusion

Under the facts and circumstances of this case, we conclude that Authority acted reasonably and in good faith, and that granting an extension of time under § 301.9100-1 to file a Form 8328 to carry forward $a of unused Year 1 volume cap will not prejudice the interests of the government. Therefore, Authority is granted an extension of time to 45 days from the date of this letter ruling to file the Form 8328 to carry forward $a of unused Year 1 volume cap. A copy of this letter should be attached to the Form 8328. A copy is enclosed for that purpose.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences 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) provides that it may not be used or cited as precedent.
PLR-142443-09
4

In accordance with a Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representative.

The ruling contained in this letter is based upon information and representations submitted by Authority and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the materials submitted in support of the request for a ruling, it is subject to verification upon examination.

Sincerely,

Assistant Chief Counsel
(Financial Institutions and Products)

By:_____
Timothy L. Jones
Senior Counsel, Branch 5

Enclosures (2)

Copy of this letter

Copy for § 6110 purposes

cc: