PLR 1322022: IRS grants more time for a foreign entity to elect disregarded-entity 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 disregarded entity 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 extension applied to the requested effective date, which is redacted in the ruling.

Ruling snapshot

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

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201322022 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-137864-12
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 disregarded entity 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 disregarded entity for U.S. income tax purposes. However, X failed to
timely file Form 8832, Entity Classification Election electing to treat X as a disregarded
entity 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 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)(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 disregarded as an entity separate from its owner if it has a
single owner that does not have limited liability. A foreign eligible entity with a single
PLR-137864-12 2

owner may elect to be treated as a disregarded entity 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 disregarded entity effective Date 2. A copy of
this letter should be attached to the Form 8832.

    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 6100(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-137864-12 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: