PLR 1037003: IRS granted late disregarded-entity election relief to a foreign entity

Plain-English summary

The IRS granted a foreign entity a 120-day extension to file Form 8832 and elect disregarded-entity treatment for federal tax purposes. The entity represented that it was eligible for that classification but had not timely filed the election. The IRS concluded that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied. The ruling applies only to the requesting taxpayer and addresses no other federal tax consequences.

Ruling snapshot

• Question: Could the foreign entity obtain extra time to make its disregarded-entity election?
• Outcome: Approved
• Key authorities: IRC §§ 7701, 9100, and 6110; Treas. Reg. §§ 301.7701-2, 301.7701-3, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201037003 Third Party Communication: None
Release Date: 9/17/2010 Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
------------------------ -------------------, ID No. -------------
------------------------------------------- Telephone Number:
------------------------------------------------ ---------------------
------------------------------------------------------------ Refer Reply To:
CC:PSI:02
PLR-104493-10
Date:

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

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

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

  This responds to a letter dated January 28, 2010, submitted on behalf of X,

requesting that the Service grant X an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations to make an entity classification election.

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

X represents that X is a foreign entity eligible to be treated as a disregarded entity but
that it failed to timely file Form 8832, Entity Classification Election.

   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. A "business entity" is any entity
recognized for federal tax purposes that is not properly classified as a trust under
§ 301.7701-4 or otherwise subject to special treatment under the Internal Revenue
Code.

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

  Section 301.7701-3(c) provides that to elect to be classified other than as

provided in § 301.7701-3(b), an eligible entity must file Form 8832 with the designated
PLR-104493-10 2

service center and that an entity classification election must be filed on Form 8832 and
can be effective up to seventy-five (75) days prior to the 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 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 1. A copy of this letter should be attached to the Form 8832. A copy is
enclosed for that purpose.

   Except as expressly provided herein, we express or imply no opinion concerning

the federal tax consequences of any aspect 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) of

the Code provides that it may not be used or cited as precedent.
PLR-104493-10 3

   In accordance with a power of attorney on file with this office, a copy of this letter

is being sent to X’s authorized representatives.

                                                 Sincerely,

                                                 Associate Chief Counsel
                                                 (Passthroughs and Special Industries)



                                       By:       _______________
                                                 Richard T. Probst
                                                 Branch Reviewer, Branch 2
                                                 Office of Associate Chief Counsel
                                                 (Passthroughs & Special Industries)

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