PLR 201230013: IRS grants more time for a foreign entity classification election

Plain-English summary

The IRS granted a group of foreign entities 120 days to file Form 8832 and elect to be treated as associations taxable as corporations for federal tax purposes. The entities intended to use that classification from specified effective dates, but the forms were not timely filed. The IRS concluded that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied. The entities were directed to file properly executed Forms 8832 with the appropriate service center and attach a copy of the ruling. The ruling did not address other federal tax consequences.

Ruling snapshot

• Question: Could the entities receive an extension of time to file Form 8832 and elect association classification under Treas. Reg. § 301.7701-3(c)?
• Outcome: Approved, with 120 days to make the election.
• Key authorities: Treas. Reg. §§ 301.7701-3(a), 301.7701-3(b)(2), 301.7701-3(c), 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: 201230013
Third Party Communication: None
Release Date: 7/27/2012
Date of Communication: Not Applicable
Person To Contact:
Index Numbers: 7701.00-00; 9100.31-00
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Telephone Number:
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Refer Reply To:
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CC:PSI:B01
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PLR-145654-11
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Date:
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March 8, 2012

LEGEND

X = See attached list

D = See attached list

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

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

This responds to a letter dated October 31, 2011, and subsequent correspondence, submitted on behalf of X, 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

According to the information submitted, X was formed under the laws of Country. X intended to be treated as an association taxable as a corporation for federal tax purposes effective D. However, Form 8832, Entity Classification Election, was not timely filed with the appropriate service center.

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 at least two
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members can elect to be classified as either an association taxable as a corporation or a partnership.

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.

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 the form 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, except subtitles E, G, H, and I. Section 301-9100-1(b) defines the term "regulatory election" as including an election whose due date is prescribed by a regulation published in the Federal Register.

Sections 301.9100-1 through 301.9100-3 provide the standards that 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 rules for requesting extensions of time for regulatory 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.

CONCLUSION

Based solely on the facts submitted and the 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 make an election to be treated as an association taxable as a corporation for federal tax purposes effective D. X should make the election by filing a properly executed Form 8832 with the appropriate service center. A copy of this letter should be attached to the form.

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.
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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.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to X’s authorized representative.

Sincerely,

Faith P. Colson
Faith P. Colson
Senior Counsel, Branch 1
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)

Enclosures (2)

Copy of this letter
Copy for § 6110 purposes

cc:
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List of entities receiving ruling

X (name) and EIN
D (effective date of election) PLR number
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