PLR 1322021: IRS grants more time for a foreign entity to elect partnership status

Plain-English summary

The IRS granted a foreign entity an additional 120 days to file Form 8832 and elect to be treated as a partnership for federal tax purposes. The entity was eligible for that classification but had not filed the form on time. The IRS found that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied. The relief was conditioned on the entity's owners filing required federal income tax and information returns consistently with the requested effective date, including any applicable section 6038 filings.

Ruling snapshot

• Question: Could the foreign entity receive extra time to file Form 8832 and elect partnership treatment effective on the requested date?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3; IRC § 6038; IRC § 6110(k)(3).

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201322021 Third Party Communication: None
Release Date: 5/31/2013 Date of Communication: Not Applicable
Index Number: 9100.31-00, 7701.00-00
Person To Contact:
-------------------------------- ----------------------, ID No. -------------
----------------------------------------------------------- Telephone Number:
---------------------------- ---------------------
--------------------------------- Refer Reply To:
---------------------------------------------------- CC:PSI:B02
PLR-137857-12
Date:
January 16, 2013

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

Country = -------

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

Date 2 = ------------------

Dear ----------------

   This is in response to a letter dated August 30, 2012, submitted on behalf of X,

by X’s authorized representatives, requesting that the Service grant X an extension of
time under § 301.9100-1(c) of the Procedure and Administration Regulations to elect to
treat X as a partnership for federal tax purposes.

    X was formed on Date 1, under the laws of Country. X is a foreign entity eligible

to be treated as a partnership for U.S. income tax purposes. However, X failed to timely
file Form 8832, Entity Classification Election electing to treat X as a partnership for
federal tax purposes effective Date 2.

   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 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.

    Section 301.7701-3(b)(2) provides guidance on the classification of a foreign

eligible entity for federal tax purposes. Unless the entity elects otherwise, a foreign
eligible entity is treated as an association if all members have limited liability. A foreign
eligible entity is treated as a partnership if it has two or more members and at least one
member does not have limited liability. A foreign eligible entity with more than one
PLR-137857-12 2

owner may elect to be treated as a partnership pursuant to the rules under § 301.7701-
3(c).

    Section 301.7701-3(c)(1)(iii) provides than 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, X is granted an
extension of 120 days from the date of this letter to file Form 8832 with the appropriate
service center to elect to be classified as a partnership effective Date 2. A copy of this
letter should be attached to the Form 8832.

   This ruling is contingent on the owners of X filing all required Federal income tax

and information returns (including amended returns) consistent with the requested relief
being effective on Date 2. The owners’ filing obligations may include those required
under section 6038 and the regulations thereunder.

    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. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be
used or cited as precedent.

   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.
PLR-137857-12 3

    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,

                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)



                              By: ____________________________
                                  Charlotte Chyr
                                  Senior Technician Reviewer, Branch 2
                                  (Passthroughs & Special Industries)

Enclosures (2)
Copy of this letter
Copy for § 6110 purposes

cc: