PLR 1226014: IRS grants time to file an entity classification election

Plain-English summary

The IRS grants a foreign eligible entity 120 days to file Form 8832 and make an entity classification election, based on a finding that the taxpayer acted reasonably and in good faith and that relief will not prejudice the government. Although the request describes an election to be treated as an association taxable as a corporation, the conclusion grants time to elect to be treated as a partnership effective on the specified date. The relief is contingent on the owner filing required federal income tax and information returns consistently with the relief, including any filings required under §§ 6038 and 6038B. The ruling does not address other federal tax consequences.

Ruling snapshot

• Question: May a foreign eligible entity receive more time to file Form 8832 and make an entity classification election?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, and 301.9100-3; IRC §§ 6501(c)(8), 6038, and 6038B

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201226014 Third Party Communication: None
Release Date: 6/29/2012 Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.31-00 -------------------, ID No. -----------------
Telephone Number:
---------------------
----------------------------------------------------------- Refer Reply To:
----------------------------------- CC:PSI:02
----------------- PLR-143657-11
--------------------------------------- Date:
March 14, 2012

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

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

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

   This responds to a letter dated October 14, 2011, and subsequent

correspondence, submitted on behalf of X, requesting that the Service grant X an
extension of time under § 301.9100-3 of the Procedure and Administration Regulations
to make an entity classification election to be classified as an association taxable as a
corporation for federal tax purposes.

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

X represents that, as of Date 1, X was a foreign entity eligible to elect to be treated as
an association taxable as a corporation for federal tax purposes. 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 Date 1.

   Section 301.7701-2(a) generally provides that a "business entity" is any entity

recognized for federal tax purposes that is not properly classified as a trust under
§ 301.7701-4 or otherwise subject to special treatment under the Internal Revenue
Code.

    Section 301.7701-3(a) provides that a business entity with at least two members

can elect to be classified either as an association (and thus a corporation under
§ 301.7701-2(b)(2)) or a partnership, and an eligible entity with a single owner can elect
to be classified as an association or to be disregarded as an entity separate from its
owner.
PLR-143657-11 2

    Section 301.7701-3(a) further provides that so long as a business entity is not

classified as a corporation under § 301-7701-2(b)(1) or (3)-(8) (an “eligible entity”) it
may elect its classification for federal tax purposes.

    Section 301.7701-3(b)(2) provides guidance on the classification of a foreign

eligible entity for federal income 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.

    Section 301.7701-3(c) provides that to elect to be classified other than as

provided in § 301.7701-3(b), an eligible entity must file Form 8832 with the designated
service center and 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 twelve 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
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.

    Section 301.9100-3(a) provides that a request for relief under § 301.9100-3 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 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 1. A copy of this letter should be attached to the Form 8832. A copy is enclosed
for that purpose.

  This ruling is contingent on the owner of X filing within 120 days of this letter or

the expiration of the period of limitations (taking into account the effect of § 6501(c)(8))
PLR-143657-11 3

for any year at issue in this ruling all required Federal income tax and information
returns (including amended returns) consistent with the requested relief being effective
on Date 1. The owner’s filing obligations may include those required under §§ 6038 and
6038B and the regulations thereunder.

   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.

  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 a power of attorney on file with this office, copies of this letter

are being sent to X’s authorized representatives.

                                                 Sincerely,

                                                 Associate Chief Counsel
                                                 (Passthroughs and Special Industries)



                                       By:       _______________
                                                 Bradford R. Poston
                                                 Senior Counsel, Branch 2
                                                 Office of Associate Chief Counsel
                                                 (Passthroughs & Special Industries)

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

cc: