PLR 201308013: IRS grants extra time for a foreign entity's Form 8832 election

Plain-English summary

The IRS granted a foreign eligible entity 120 days to file Form 8832 and elect to be treated as an association taxable as a corporation for federal tax purposes. The entity had been indirectly acquired by a domestic corporation and had missed the deadline for an election effective on the requested date. The IRS found that the requirements for relief under section 301.9100-3 were satisfied. The entity was required to file the election and consistent returns within the 120-day period.

Ruling snapshot

• Question: Could the foreign entity receive more time to make its Form 8832 classification election?
• Outcome: Approved
• Key authorities: IRC § 6110(k)(3); Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-2, and 301.9100-3; Form 8832

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201308013
Third Party Communication: None
Release Date: 2/22/2013
Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.00-00, 7701.00-00,
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Telephone Number:
9100.31-00
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Refer Reply To:
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PLR-125768-12
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Date:
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October 10, 2012
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Legend

X = -----------------------------
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Y = -------------------------------------------------------------------
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Date = ------------------------

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

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

This is in response to a letter dated June 14, 2012, and subsequent correspondence, submitted on behalf of X, by X’s authorized representative, requesting that the Service grant Y an extension of time under § 301.9100-1(c) of the Procedure and Administration Regulations to elect to be treated as an association taxable as a corporation for federal tax purposes.

According to the information submitted, X is a domestic corporation. On Date, X indirectly acquired Y under the laws of Country. Y is a foreign entity eligible to elect to be treated as an association taxable as a corporation for federal tax purposes. However, Y failed to timely file Form 8832, Entity Classification Election electing to be treated as an association taxable as a corporation for federal tax purposes effective Date.

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
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elect its classification for federal tax purposes. Elections are necessary only when an eligible entity does not want to be classified under the default classification or when an eligible entity chooses to change its classification.

Section 301.7701-3(b) provides default classification for an eligible entity that does not make an election. Section 301.7701-3(b)(2)(i) provides that, unless the entity elects otherwise, a foreign eligible entity is (A) a partnership if it has two 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(c)(1)(iii) provides that an entity classification election must be filed on Form 8832 and can be effective up to 75 days prior to the election filing date or more than 12 months after the election filing date.

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 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 by which the Commissioner will determine whether to grant an extension of time to make an election. Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections. Section 301.9100-3 describes the conditions under which the Commissioner will grant requests for relief 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 (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 facts submitted and representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. Accordingly, Y is granted an extension of 120 days from the date of this letter to elect to be classified as an association taxable as a corporation for federal tax purposes, effective Date. The elections should be made by filing Form 8832 with the appropriate service center. A copy of this letter should be attached to each election.

This ruling is contingent on Y filing within 120 days of this letter all required returns and amended income tax returns consistent with the requested relief in this letter. A copy of this letter should be attached to any such returns.

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.
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Section 6110(k)(3) of the Internal Revenue Code 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 will be sent to X’s authorized representative.

Sincerely,

Melissa Liquerman
Branch Chief, Branch 2
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)

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