PLR 1206012: Extension granted to elect association treatment for federal tax purposes

Plain-English summary

The IRS granted a foreign eligible entity 120 additional days to file Form 8832 and elect to be treated as an association taxable as a corporation. The entity was eligible to make the election but inadvertently failed to file the form on time. The IRS concluded that the entity acted reasonably and in good faith and that granting relief would not prejudice the government. The election was to be effective on the stated date, and the taxpayer was instructed to attach a copy of the letter to the election.

Ruling snapshot

• Question: May a foreign eligible entity receive additional time to elect association treatment for federal tax purposes?
• Outcome: Approved.
• Key authorities: IRC §§ 7701 and 9100; 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: 201206012 Third Party Communication: None
Release Date: 2/10/2012 Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.00-00, 7701.00-00 -----------------, ID No. ------------------
Telephone Number:
---------------------
-------------------------- Refer Reply To:
-------------------------------------------------------- CC:PSI:BR01
--------------------------- PLR-134806-11
--------------------------- Date:
--------------------------------------- October 06, 2011

      Legend:

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

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

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

               Date 2            =        -------------------------

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

    This letter responds to a request, dated August 18, 2011, written on behalf of X,

requesting a written determination granting X an extension of time pursuant to section
301.9100-3 of the Procedure and Administration Regulations to file an election to be
treated as an association taxable as a corporation for federal tax purposes.

                                                       Facts

    According to the information submitted, X was formed on Date 1, under the laws

of Country. X represents that as of Date 2, it was eligible to make an election, under
section 301.7701-3(c), to be treated as an association taxable as a corporation for
federal income purposes. However, the Form 8832, Entity Classification Election, was
inadvertently not timely filed. X represents that granting relief to allow it to file a late
election to be treated as a corporation for federal tax purposes will not prejudice the
interests of the government. In addition, X represents that it acted reasonably and in
good faith.

PLR-134806-11 2

                                 Law and Analysis

    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 a foreign eligible entity has one
owner, it may elect to be treated as a disregarded entity pursuant to the rules in section
301.7701-3(c). If a foreign eligible entity has more than one owner, it may elect to be
treated as a partnership pursuant to the rules in section 301.7701-3(c). Section
301.7701-3(c) provides that an entity classification election must be filed on Form 8832
and can be effective up to 75 days prior to the date the form is filed or up to 12 months
after the date on which the form is filed.

    To elect to be classified other than as provided in section 301.7701-3(b), an

eligible entity must file Form 8832, Entity Classification Election, with the designated
service center. Section 301.7701-3(c)(1)(i). An election can be effective on the date
specified on the Form 8832 or on the date filed if no such date is specified. The effective
date specified on the Form 8832 cannot be more than 75 days prior to the date the
election is filed. Section 301.7701-3(c)(2)(iii).

   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 301.9100-1(a). 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. 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. Section 301.9100-3(a).

                                    Conclusion

    Based solely on the facts submitted and representations made, we conclude that

the requirements of § 301.9100-3 have been satisfied. Accordingly, X is granted an
extension of time of 120 days from the date of this letter to elect to be treated as an
association taxable as a corporation for federal tax purposes, effective Date 1. The
election should be made by filing Form 8832 with the appropriate service center. A copy
of this letter should be attached to the election.

   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.

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)

provides that it may not be used or cited as precedent.

PLR-134806-11 3

  Pursuant to the power of attorney on file with this office, a copy of this letter will

be sent to your representative.

                                    Sincerely,


                                    Associate Chief Counsel
                                    (Passthroughs and Special Industries)

                                    David R. Haglund
                                    By: David R. Halgund
                                    Chief, Branch 1
                                    (Passthroughs and Special Industries)

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

cc: