PLR 201123002: IRS grants more time to elect association tax treatment

Plain-English summary

An entity asked for more time to file Form 8832 to be classified as an association taxable as a corporation for federal tax purposes. It had intended to make the election effective on its formation date but failed to file the form on time. The IRS found that the requirements for relief were satisfied and granted 120 days to make the election. The entity must file a properly executed Form 8832 with the appropriate service center and attach a copy of the ruling.

Ruling snapshot

• Question: May the entity make a late election to be classified as an association taxable as a corporation?
• Outcome: Approved, with a 120-day extension and required Form 8832 filing.
• Key authorities: IRC § 6110; Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-2, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201123002
Third Party Communication: None
Release Date: 6/10/2011
Date of Communication: Not Applicable
Index Number: 7701.02-00, 9100.31-00
Person To Contact:
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Refer Reply To:
CC:PSI:B01
PLR-102299-11
Date:
March 09, 2011

Legend

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

D1 = ---------------------------

State = ----------------

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

This is in response to a letter dated -------------------, 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 an association taxable as a corporation for federal tax purposes.

FACTS

According to the information submitted, X was formed on D1 under the laws of State. X intended to be treated as an association taxable as a corporation for federal tax purposes effective D1. However, X inadvertently failed to timely file a Form 8832, Entity Classification Election, electing to treat X as an association taxable as a corporation effective D1.
LAW AND ANALYSIS

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. Section 301.7701-3(b)(1)(ii) provides that unless the entity elects otherwise, a domestic eligible entity is a partnership if it has
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2

two or more members or is disregarded as an entity separate from its owner if it has a single owner.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be classified other than as provided under § 301.7701-3(b) by filing Form 8832 with the service center designated on the form. Section 301.7701-3(c)(1)(iii) provides that an election made under § 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on Form 8832 or on the date filed, if no such date is specified on the election form. The effective date specified on Form 8832 can not be more than 75 days prior to the date on which the election is filed and can not be more than 12 months after the date on which the election 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 six months except in the case of a taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term regulatory election as including an election with a deadline 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. Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of § 301.9100-2.

Section 301.9100-3(a) provides that 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 120 days from the date of this letter to make an election to be treated as an association taxable as a corporation for federal tax purposes effective D1. 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.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter. Specifically, no opinion is expressed or implied concerning whether X otherwise qualifies as a corporation for federal tax purposes.
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The ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the ruling request, it is subject to verification on examination.

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,

/S/
______
Barbara J. Campbell
Senior Technician Reviewer, Branch 1
(Passthroughs & Special Industries)

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