PLR 201137003: IRS grants more time to elect corporate tax classification

Plain-English summary

A limited liability company intended to be classified as an association taxable as a corporation for federal tax purposes but did not timely file Form 8832. The company asked for an extension of time to make the entity classification election effective on its intended date. The IRS concluded that the company met the requirements for relief and granted 120 days from the ruling date to file the form. The ruling did not determine whether the company was otherwise eligible to make the election.

Ruling snapshot

• Question: Whether the company should receive more time to file Form 8832 and elect corporate tax classification effective on its intended date.
• Outcome: Approved.
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201137003
Third Party Communication: None
Release Date: 9/16/2011
Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
--------------------------------------
--------------, ID No. -----------------
------------------------
Telephone Number:
----------------------------
---------------------
--------------------------
Refer Reply To:
CC:PSI:B03
PLR-104880-11
Date:
June 06, 2011

LEGEND:

Company = -------------------------------------------------------------------------------------------------
-----------------------

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

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

Dear --------------

This responds to a letter dated December 7, 2010, and subsequent correspondence, submitted on behalf of Company, 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 an association taxable as a corporation for federal tax purposes.

Facts

Company was formed on Date as a limited liability company under the laws of State. Company intended to elect to be treated as an association taxable as a corporation effective Date. However, Company failed to timely file Form 8832, Entity Classification Election. Accordingly, Company requests a ruling that it will be treated as an association taxable as a corporation effective Date.
PLR-104880-11
2

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. An eligible entity with a single owner can elect to be classified as an association (and thus a corporation under § 301.7701- 2(b)(2)) or to be disregarded as an entity separate from its owner.

Section 301.7701-3(b)(1) provides that except as provided in § 301.7701-3(b)(3), unless a domestic eligible entity elects otherwise, a domestic eligible entity is (i) a partnership if it has two or more members, or (ii) disregarded as an entity separate from its owner if it has a single owner.

Section 301.7701-3(c)(1)(i) provides, in part, 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 Form 8832.

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.

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 (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 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 the evidence (including affidavits described in § 301.9100-3(e)) to establish that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.
PLR-104880-11
3

Conclusion

Based solely on the information submitted and representations made, we conclude that Company has satisfied the requirements of § 301.9100-3. As a result, Company is granted an extension of time of one hundred twenty (120) days from the date of this letter to file a properly executed Form 8832 with the appropriate service center, electing to be treated as an association taxable as a corporation for federal tax purposes effective Date. A copy of this letter should be attached to the form.

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. In addition, § 301.9100-1(a) provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election.

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.

Under a power of attorney on file with this office, we are sending a copy of this letter to Company’s authorized representative.

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.

Sincerely,

Associate Chief Counsel
(Passthroughs & Special Industries)

By:
Mary Beth Carchia
Senior Technician Review, Branch 3
Office of Chief Counsel
(Passthroughs & Special Industries

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