PLR 1032008: IRS granted time to correct an incomplete entity election

Plain-English summary

A foreign eligible entity filed an incomplete Form 8832 when it intended to elect disregarded-entity status for federal tax purposes. The IRS found that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied. It granted the entity 120 days from the ruling date to file a complete Form 8832 and make the election effective on the stated date. The owner also had to file required returns and Form 8858 consistent with the relief.

Ruling snapshot

• Question: Can a foreign eligible entity correct an incomplete Form 8832 after the filing deadline?
• 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: 201032008 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-108442-10
----------------------------- Date:
-------------------------- April 21, 2010

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

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

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

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

Year = -------

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

    This letter responds to a request, dated February 19, 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 1. X represents that X is a foreign entity eligible to be classified as a disregarded
entity for federal tax purposes. In Year, X inadvertently filed an incomplete 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-108442-10 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. As a result, X is
granted an extension of time of 120 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 2. A copy of this letter should be attached to the Form 8832. A copy is
enclosed for that purpose.

   This ruling is contingent on the owner of X filing within 120 days of this letter all

required returns and amended income tax returns consistent with the requested relief
being effective Date 2. To the extent appropriate these returns must include, but are
not limited to 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.

   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-108442-10 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: ___________________________________
                                  Charlotte Chyr, Senior Technician Reviewer
                                  Branch 2
                                  Office of Associate Chief Counsel
                                  (Passthroughs & Special Industries)

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

cc: