PLR 1033003: IRS granted more time for a foreign entity to elect partnership classification

Plain-English summary

A foreign entity with two members intended to be treated as a partnership for federal tax purposes, but it did not timely file Form 8832. The IRS granted the entity 60 days from the ruling date to make the election effective from its specified date. The entity was required to file amended returns, including information returns, for all relevant open years. The IRS did not rule on other federal tax consequences.

Ruling snapshot

• Question: Could the foreign entity make a late election to be treated as a partnership for federal tax purposes?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201033003 Third Party Communication: None
Release Date: 8/20/2010 Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
--------------- -------- ----------------------, ID No. -----------------
-------------------------- Telephone Number:
------------------------------------- --------------------
----------------------------------------------------- Refer Reply To:
------------------------------- CC:PSI:B01
PLR-102847-10
Date:
May 12, 2010

Legend

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

Y = -----------------------

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

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

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

  This responds to a letter dated -----------------------, and subsequent

correspondence, written on behalf of X, requesting an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations to file an election under
§ 301.7701-3(c) to be treated as a partnership for federal tax purposes.

                                                    FACTS

  According to the information submitted, X was organized under the laws of

Country by Y and an unrelated Country company on D. X failed to timely file Form
8832, Entity Classification Election, to be treated as a partnership for federal tax
purposes effective D.

                                       LAW AND ANALYSIS

   Section 301.7701-3(a) provides in part 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. An eligible entity with at least two

PLR-102847-10 2

members can elect to be classified as either an association or a partnership, and an
eligible entity with a single owner can elect to be classified as an association or to be
disregarded as an entity separate from its owner.

     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 if all members have limited liability, unless the entity makes an election
to be treated otherwise. A foreign eligible entity with two or more members having
limited liability may elect to be treated as a partnership pursuant to the rules of §
301.7701-3(c). Section 301.7701-3(c) provides that an entity classification election
must be filed on Form 8832 and can be effective up to 75 days prior to the date the form
is filed or up to 12 months after the date the form 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 Internal
Revenue Code, except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term
“regulatory election” as including an election whose due date 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. Sections 301.9100-2 provides automatic extensions of time for making certain
elections. Sections 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 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 60 days from the date of this letter to make an election to be treated
as a partnership for federal tax purposes effective D. X should make the election by
filing a properly executed Form 8832 with the appropriate service center. A copy of this
letter should be attached to the form. X must also file amended returns, including
information returns, with respect to all relevant open years.

   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.

PLR-102847-10 3

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of

the Code provides that it may not be used or cited as precedent.

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representative.

                                   Sincerely,

                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)

                                                /s/

                                By: ______________________________
                                   David R. Haglund
                                   Chief, Branch 1
                                   Office of Associate Chief Counsel
                                   (Passthroughs & Special Industries)

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