PLR 1236021: 120-day extension granted for an entity classification election

Plain-English summary

A foreign limited liability company asked for more time to file Form 8832 and elect a classification other than its default federal tax classification. The company had inadvertently missed the filing deadline. The IRS concluded that the requirements for relief under the regulatory election rules were satisfied and granted a 120-day extension from the date of the letter. The election would be effective on the represented date, subject to filing the required returns within the same 120-day period.

Ruling snapshot

• Question: May the foreign eligible entity receive an extension of time to file Form 8832 and change its federal tax classification?
• Outcome: Approved
• Key authorities: IRC § 7701; 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: 201236021 Third Party Communication: None
Release Date: 9/7/2012 Date of Communication: Not Applicable
Person To Contact:
Index Numbers: 7701.00-00, 9100.00-00, ----------------------, ID No. -----------------
Telephone Number:
9100.31-00
---------------------
Refer Reply To:
----------------------------------------------------- CC:PSI:B03
---------------------- PLR-146163-11
------------------------- Date:
-------------------------- May 02, 2012

                                                 LEGEND

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

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

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

Year = -------

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

    This letter responds to your letter dated November 1, 2011, and subsequent

correspondence, submitted on behalf of X by X’s authorized representatives, requesting
a ruling under § 301.9100-3 of the Procedure and Administration Regulations that X be
granted an extension of time to file an election under § 301.7701-3(c).

                                                  FACTS

     X organized under the laws of Country as a limited liability company on Date 1.

X desires to be treated as other than its default classification. However, X inadvertently
failed to timely file Form 8832, Entity Classification Election.

                                         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
PLR-146163-11 2

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 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 either as association or to be disregarded as
an entity separate from its owner.

     Section 301.7701-3(b)(2)(i) provides that, unless it 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 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 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 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 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. If an
election specifies an effective date more than 75 days prior to the date on which the
election is filed, it will be effective 75 days prior to the date it was filed.

    Section 301.7701-3(d)(1)(i) provides that for purposes of § 301.7701-3, a foreign

eligible entity is relevant when its classification affects the liability of any person for
federal tax or information purposes. The date that the classification of a foreign eligible
entity is relevant is the date an event occurs that creates an obligation to file a federal
tax return, information return, or statement for which the classification of the entity must
be determined.

    Section 301.7701-3(d)(1)(ii)(A) provides that for purposes of § 301.7701-3,

except as provided in § 301.7701-3(d)(1)(ii)(B), the classification for Federal tax
purposes of a foreign eligible entity that files Form 8832, “Entity Classification Election”,
shall be deemed to be relevant only on the date the entity classification election is
effective.

  Section 301.9100-1(c) provides that the Commissioner has discretion to grant a

reasonable extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3
to make a regulatory election, or a statutory election (but no more than six months
PLR-146163-11 3

except in the case of a taxpayer who is abroad), under all subtitles of the Code except
subtitles E, G, H, and I. Section 301.9100-1(b) defines a 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.

    Section 301.9100-3(a) provides that requests for relief subject to § 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 facts 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 make an entity classification
election by filing Form 8832, effective Date 1, with the appropriate service center. A
copy of this letter should be attached to the election. A copy of this letter is attached for
this purpose.

   This ruling is contingent upon the filing within 120 days of this letter any and all

required Federal income tax and information returns from Year to the present consistent
with the requested relief.

    Except as expressly provided herein, we express or imply no opinion 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.

  In accordance with a power of attorney on file with this office, we are sending a

copy of this letter to your authorized representatives.
PLR-146163-11 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:       ______________________________________
                                 Richard T. Probst
                                 Senior Technician Reviewer, Branch 3
                                 Office of the Associate Chief Counsel
                                 (Passthroughs & Special Industries)

Enclosures (2):

  A copy of this letter
  A copy for § 6110 purposes

cc: