PLR 1108019: Foreign entity granted more time to elect partnership classification

Plain-English summary

The IRS granted a foreign entity an extension of time to file Form 8832 and elect to be classified as a partnership for federal tax purposes. The entity was eligible to make the election but had inadvertently missed the filing deadline. The IRS concluded that the requirements for relief under section 301.9100-3 were satisfied and gave the entity 120 days from the date of the letter to file the form. The relief was conditioned on filing required federal tax and information returns consistently with the requested classification and providing partners with the information needed for their returns.

Ruling snapshot

• Question: Can the foreign entity make a late election to be classified as a partnership?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3; IRC §§ 6038, 6038B, and 6046A

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201108019 Third Party Communication: None
Release Date: 2/25/2011 Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
9100.31-00 Person To Contact:
-------------------, ID No. -------------
----------------------------------------- Telephone Number:
-------------------------- ---------------------
-------------------- Refer Reply To:
----------------------------------------- CC:PSI:B02
--------------------------------------------- PLR-134016-10
--------------- Date:
November 12, 2010

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

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

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

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

    This letter responds to a request, dated August 17, 2010, and subsequent

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

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

Date. X represents that X is a foreign entity eligible to be classified as a partnership for
U.S. federal tax purposes. However, X inadvertently failed to timely file a Form 8832,
Entity Classification Election, electing to treat X as a partnership effective Date.

    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 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 more
than one owner, it may elect to be treated as a partnership pursuant to the rules in
§ 301.7701-3(c).
PLR-134016-10 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 partnership, effective
Date. A copy of this letter should be attached to the Form 8832. A copy is enclosed for
that purpose.

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

Federal income tax and information returns (including withholding tax returns required
under chapter 3 of the Internal Revenue Code), consistent with the requested relief
being effective Date. X also must provide its partners all the information necessary to
file returns (including amended returns) consistent with this classification. The partners’
filing obligations may include those required under sections 6038, 6038B, 6046A, and
the regulations thereunder. See Form 8865, Return of U.S. Persons With Respect to
Certain Foreign Partnerships, and the instructions to Form 8865.

   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-134016-10 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: