PLR 201152012: IRS permits reelection of the foreign earned income exclusion

Plain-English summary

The IRS permitted a taxpayer to reelect the IRC § 911 foreign earned income exclusion for a specified year and later tax years. The taxpayer had previously revoked the election after moving between two foreign countries with different tax rates. The IRS considered the submitted facts and representations, including the taxpayer's representation that no foreign tax credits attributable to excluded income had been taken, and granted permission under Treas. Reg. § 1.911-7(b). The ruling does not determine whether the taxpayer otherwise satisfied the requirements for the exclusion.

Ruling snapshot

• Question: May the taxpayer reelect the IRC § 911 foreign earned income exclusion after previously revoking it?
• Outcome: Approved.
• Key authorities: IRC §§ 911, 6110; Treas. Reg. § 1.911-7(b)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201152012
[Third Party Communication:
Release Date: 12/30/2011
Date of Communication: Month DD, YYYY]
Person To Contact:
Index Number: 911.11-03
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Telephone Number:
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Refer Reply To:
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CC:INTL:B02
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PLR-133757-11
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Date:
September 22, 2011

TY: --------

Legend

Taxpayer = ---------------------------
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Year 1 = -------
Country A = ------------
Country B = ----------------

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

This is in response to a letter received in this office on August 12, 2011, submitted on your behalf by your authorized representative, requesting permission to reelect the provisions of section 911 of the Internal Revenue Code (“Code”) for Year 1 and subsequent tax years.

The rulings contained in this letter are based upon information and representations submitted by 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 request for rulings, it is subject to verification on examination.

In Year 1, Taxpayer lived in Country A and worked in both Country A and Country B. During Year 1, Taxpayer moved to Country B. Country A’s tax rate is significantly higher than Country B’s tax rate. Upon the advice of his accountant at the time, Taxpayer elected to revoke his election under section 911 to exclude foreign earned income and the housing cost amount for Year 1 due to the higher amount of taxes assessed by Country A.
PLR-133757-11
2

Taxpayer represents that he has not taken foreign tax credits attributable to income excluded under section 911 and applied them to income earned in Year 1 or subsequent taxable years.

Treas. Reg. §1.911-7(b) provides that if an individual revoked an election to exclude foreign earned income under section 911(a) and within five taxable years the individual wishes to reelect the exclusion, then the individual may apply for consent to the reelection by requesting a ruling from the Associate Chief Counsel (International). In determining whether to consent to a reelection, the Associate Chief Counsel (International) or his delegate may consider any facts and circumstances relevant to the determination. Relevant facts and circumstances may include a move from one foreign country to another foreign country with differing tax rates.

Accordingly, based solely on the information and representations set forth above, Taxpayer may reelect the section 911 foreign earned income exclusion for Year 1 and subsequent tax years.

No opinion is expressed as to whether Taxpayer satisfied the requirements for the exclusion provided under section 911(a) of the Code.

This ruling is directed only to the taxpayer who requested 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,

Jeffery G. Mitchell
Branch Chief, Branch 2
(International)

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