PLR 1032004: IRS granted time to file a late disregarded-entity election

Plain-English summary

A foreign entity whose default classification was an association taxable as a corporation intended to elect disregarded-entity status but failed to timely file Form 8832. The IRS concluded that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied. It granted the entity 60 days from the ruling date to file Form 8832 and make the election effective on the stated date. The owners also had to file required original or amended returns within 120 days, including Forms 5471 and 8858 where appropriate.

Ruling snapshot

• Question: Can a foreign entity receive more time to make a late disregarded-entity election?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3; IRC § 6110(k)(3).

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201032004 Third Party Communication: None
Release Date: 8/13/2010 Date of Communication: Not Applicable
Person To Contact:
Index Number: 7701.00-00, 9100.00-00, -------------------, ID No. -------------
Telephone Number:
9100.31-00
---------------------
Refer Reply To:
------------------------ CC:PSI:B02
--------------------------------- PLR-102546-10
------------------------- Date:
March 22, 2010

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

Country = -----------------

Date = -----------------------

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

    This letter responds to a request, dated January 15, 2010, submitted on behalf of

X by its authorized representative, requesting an extension of time under § 301.9100-3
of the Procedure and Administration Regulations to file an election to be classified as a
disregarded entity for federal tax purposes.

    The information submitted states that X was formed under the laws of Country on

Date. X’s default status was as an association taxable as a corporation for federal tax
purposes. X was a foreign entity eligible to be classified as a disregarded entity for
federal tax purposes effective Date but inadvertently failed to timely file a Form 8832,
Entity Classification Election.

     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 one
owner, it may elect to be treated as a disregarded entity pursuant to the rules in
§ 301.7701-3(c).
PLR-102546-10 2

   Section 301.7701-3(c) provides that an entity classification election must be filed

on Form 8832 and can be effective up to seventy-five (75) days prior to the due 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 the representations made, we

conclude that the requirements of § 301.9100-3 have been satisfied. Accordingly, 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 to elect to be treated as a disregarded entity for
federal tax purposes effective Date. A copy of this letter should be attached to the Form
8832.

    This ruling is contingent on the owners of X filing within 120 days of this letter any

required original and amended tax returns consistent with the requested relief being
effective on Date. To the extent appropriate these returns must include, but are not
limited to, Forms 5471, Information Return of U.S. Persons With Respect to Certain
Foreign Corporations, and Forms 8858, Information Return of U.S. Persons With
Respect to Disregarded Entities, such that these forms reflect the consequences of the
relief granted in this letter. Copies of this letter should be attached to any returns or
amended returns.

   Except as specifically set forth above, no opinion is expressed or implied

concerning the federal tax consequences of the facts described above under any other
provision of the Code.

   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.
PLR-102546-10 3

   Pursuant to a power of attorney on file with this office, a copy of this letter is

being sent to X’s authorized representative.

                                    Sincerely,

                                    Associate Chief Counsel
                                    (Passthroughs & Special Industries)



                              By: ______________________________
                                  Bradford R. Poston, Senior Counsel
                                  Branch 2
                                  Office of Associate Chief Counsel
                                  (Passthroughs & Special Industries)

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

cc: