PLR 1313004: 120-day extension granted for entity-classification election

Plain-English summary

The IRS granted a limited liability company 120 days to file Form 8832 and elect to be classified as an association for federal tax purposes. The company had missed the deadline for making the election under the entity-classification regulations. The IRS found that the requirements for relief were satisfied, including that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. The extension was effective for the specified redacted date, and the taxpayer had to attach a copy of the ruling to Form 8832.

Ruling snapshot

• Question: May the limited liability company make a late election to be classified as an association for federal tax purposes?
• Outcome: Approved, with 120 days to file Form 8832.
• 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: 201313004
Release Date: 3/29/2013
Index Numbers: 7701.00-00, 9100.31-00

-------------------------- Person To Contact:
------------------------------------------------------------ -----------------------, ID No. --------------
-- Telephone Number:
------------------------------------------------------ ----------------------
------------------------------------- Refer Reply To:
CC:PSI:B03 – PLR-127541-12
Date: November 8, 2012

                                                  LEGEND

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

Y = ----------------------------------------

State = ---------------

a = ---------------------------

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

  This letter responds to a letter dated June 21, 2012, 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(a) to be classified as an association for federal tax purposes.

                                                  FACTS

   The information submitted discloses that X was formed on a as a limited liability

company under the laws of State. X’s ultimate owner is Y, the common parent
corporation of an affiliated group that files a consolidated return. X failed to file timely a
Form 8832, Entity Classification Election, to be classified as an association for federal
tax purposes, effective a.

                                        LAW AND ANALYSIS

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PLR-127541-12

    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)(1) provides that, except as provided in § 301.7701-

3(b)(3), unless the entity elects otherwise, a domestic eligible entity is: (i) A partnership
if it has two or more members; or (ii) Disregarded as an entity separate from its owner if
it has a single owner.

   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,
Entity Classification Election, 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.

   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 (Code) except subtitles E, G, H, and I. Section 301.9100-1(b) provides
that the term “regulatory election” includes 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 the

Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-2 provides automatic extensions of time for making certain
elections. Section 301.9100-3 provides extensions of time for regulatory elections that
do not meet the requirements of § 301.9100-2.

   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.
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PLR-127541-12

                                  CONCLUSION

    Based on the facts and representations submitted, X has established that the

requirements of §§ 301.9100-1 and 301.9100-3 are satisfied. Consequently, X is
granted an extension of time of one hundred twenty (120) days from the date of this
letter to elect under § 301.7701-3 to be treated as an association, effective a. X must
file Form 8832 within the extension period with the appropriate service center, with a
copy of this letter attached.

   Except for the specific ruling above, we express or imply no opinion concerning

the federal tax consequences of the facts of this case under any other provision of the
Code. In addition, § 301.9100-1(a) provides that the granting of an extension of time for
making an election is not a determination that the taxpayer is otherwise eligible to make
the election.

  This ruling is directed only to the taxpayer requesting it. According to

§ 6110(k)(3) of the Code, this ruling may not be used or cited as precedent.

    Under a power of attorney on file with this office, we are sending a copy of this

letter to X’s authorized representatives.

                                          Sincerely,

                                          Associate Chief Counsel
                                          (Passthroughs & Special Industries)


                                      By: /s/
                                         James A. Quinn
                                         Senior Counsel, Branch 3
                                         Office of the Associate Chief Counsel
                                         (Passthroughs & Special Industries)

Enclosures: Copy of this letter
Copy for § 6110 purposes