PLR 1337011: Foreign entity receives more time to elect partnership classification

Plain-English summary

A foreign entity asked for more time to file Form 8832 and elect partnership classification for U.S. federal tax purposes. The IRS concluded that the entity acted reasonably and in good faith and that granting relief would not prejudice the government. It granted a 120-day extension to make the election effective on a redacted date. The relief was conditioned on filing required returns for open years, including Forms 8865 where applicable.

Ruling snapshot

• Question: May the foreign entity receive an extension of time to elect partnership classification?
• Outcome: Approved, with a 120-day filing period and return-filing conditions.
• Key authorities: 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: 201337011 Third Party Communication: None
Release Date: 9/13/2013 Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
-------------------------------- -----------------------, ID No. -------------------
------------------------------------- ---------------------------------------------------
------------------------ Telephone Number:
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Refer Reply To:
CC:PSI:02
PLR-149992-12
Date:
May 06, 2013

                                               LEGEND

                   -------------------------------------

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

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

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

  This letter responds to a letter dated November 14, 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 and election under
§ 301.7701-3(c) to be classified as a partnership for federal tax purposes.

   According to the information submitted, X was organized under the laws of

Country on Date 1. X represents that it is a foreign entity eligible to elect to be classified
as a partnership for federal tax purposes; however, X failed to timely file Form 8832,
Entity Classification Election, to be treated as a partnership effective Date 1.

    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 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.

PLR-149992-12 2

    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 with two or more members having limited liability may elect to be treated
as a partnership pursuant to the rules of § 301.7701-3(c).

    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 date the form is filed
or up to 12 months after the date the form is filed.

   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 the representations made, we conclude

that the requirements of § 301.9100-3 have been satisfied. As a result, X is granted an
extension of time of 120 days from the date of this letter to make an election to be
classified as a partnership for federal tax purposes effective Date 1. X should make the
election by filing a properly executed Form 8832 with the appropriate service center. A
copy of this letter should be attached to the form and is included for that purpose.

   This ruling is contingent on the owners of X filing within 120 days of this letter all

required returns for all open years consistent with the requested relief including, to the
extent not already filed, Forms 8865, Return of U.S. Persons With Respect to Certain
Foreign Partnerships. A copy of this letter should be attached to any such returns.

  The rulings contained in this letter are 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 request for rulings, it is subject to verification on
examination.

PLR-149992-12 3

   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 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 is being sent to your authorized representative.

                                   Sincerely,



                                   Melissa C. Liquerman
                                   Branch Chief, Branch 2
                                   (Passthroughs & Special Industries)

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