PLR 201320016: IRS grants more time to elect corporate tax classification

Plain-English summary

The IRS considered a business entity's request for extra time to elect to be treated as an association taxable as a corporation. The entity had been formed in a state, defaulted to partnership classification, and did not timely file Form 8832. The IRS found that the requirements for relief under the regulations were satisfied. It granted 120 days from the date of the letter to make the election, effective on the redacted date. The ruling also required the entity to file consistent returns and amended returns within that period.

Ruling snapshot

• Question: May the entity receive additional time to file its election to be classified as an association taxable as a corporation?
• Outcome: Approved
• Key authorities: IRC §§ 7701 and 9100; 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: 201320016
Third Party Communication: None
Release Date: 5/17/2013
Date of Communication: Not Applicable
Index Number: 9100.00-00, 7701.00-00,
9100.31-00
Person To Contact:
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Refer Reply To:
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CC:PSI:B02
PLR-152324-12
Date:
January 08, 2013

Legend

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

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

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

Dear ----. ---------:

This is in response to a letter dated December 6, 2012 submitted on behalf of X by X’s authorized representative, requesting that the Service grant X 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 was formed in State on Date. X's default status was a partnership for federal tax purposes. A Form 8832, Entity Classification Election was not timely filed for X to elect to be treated as an association effective on Date.

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. An eligible entity with a single owner can elect to be classified as an association or disregarded as an entity separate from its owner.

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.
PLR-152324-12
2

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, X 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 election should be made by filing Form 8832 with the appropriate service center. A copy of this letter should be attached to the election.

This ruling is contingent on X 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. 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,

Bradford Poston
Senior Counsel, Branch 2
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)

cc: