PLR 1229006: IRS grants more time to elect partnership classification

Plain-English summary

The IRS granted a foreign eligible entity an additional 120 days to file Form 8832 and elect partnership classification for federal tax purposes. The entity intended to make the election effective on a specified date but inadvertently missed the filing deadline. The IRS concluded that the requirements for relief under Treasury Regulation § 301.9100-3 were satisfied. The extension was conditioned on filing the form and any required consistent returns within 120 days.

Ruling snapshot

• Question: May a foreign eligible entity receive additional time to file Form 8832 and elect partnership classification?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3; IRC § 6110(k)(3)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201229006 Third Party Communication: None
Release Date: 7/20/2012 Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
----------------------- -------------------, ID No. -------------
------------------------------------------------------------ Telephone Number:
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---------------------------------------------- Refer Reply To:
CC:PSI:3
PLR-143292-11
Date:
April 06, 2012

LEGEND

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

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

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

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

This letter responds to a letter dated October 13, 2011, and subsequent correspondence, submitted on behalf of Company by its authorized representative, 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 treat Company as a partnership for federal tax purposes.

FACTS

According to the information submitted, Company was formed under the laws of Country on Date. Company represents that it is a foreign entity eligible to elect to be classified as a partnership for federal tax purposes. Company intended to be treated as a partnership effective Date. However, Company inadvertently failed to timely file a Form 8832, Entity Classification Election.

LAW AND ANALYSIS

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Section 301.7701-3(a) provides, in part, 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 as provided in § 301.7701-3. An eligible entity with at least two members can elect to be classified as either 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.

Section 301.7701-3(b)(2)(i) provides that, except as provided in § 301.7701-3(b)(3), unless the entity elects otherwise, a foreign eligible entity is: (A) a partnership if it has two or more members and at least one member does not have limited liability; (B) an association if all members have limited liability; or (C) disregarded as an entity separate from its owner if it has a single owner that does not have limited liability.

Section 301.7701-3(b)(2)(ii) provides, in part, that for purposes of § 301.7701-3(b)(2)(i), a member of a foreign eligible entity has limited liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member.

Section 301.7701-3(c)(1)(i) provides, in part, that, except as provided in § 301.7701-3(c)(1)(iv) and (v), an eligible entity may elect to be classified other than as provided under § 301.7701-3(b), or to change its classification, by filing Form 8832 with the service center designated on Form 8832.

Section 301.7701-3(c)(1)(iii) provides, in part, 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.

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(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 Internal Revenue Code (Code) except subtitles E, G, H, and I. Section 301.9100-1(b) defines regulatory election to include an election whose due date is prescribed by a regulation published in the Federal Register.

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.

PLR-143292-11 3

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 to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

CONCLUSION

Based solely on the information submitted and the representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. As a result, Company 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 to elect to be treated as a partnership effective Date. A copy of this letter should be attached to the Form 8832.

This ruling is contingent upon the filing within 120 days of this letter any and all required returns and amended income tax and information returns consistent with the requested relief being effected Date.

Except as expressly provided herein, we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the Internal Revenue Code (Code).

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, we are sending a copy of this letter to Company’s authorized representatives.

PLR-143292-11 4

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: _____________________________________
                             Stacy L. Short
                             Senior Technician Reviewer, Branch 3
                             Office of Associate Chief Counsel
                             (Passthroughs & Special Industries)

Enclosures (2)
A copy of this letter
A copy for § 6110 purposes