PLR 1343015: late IC-DISC election granted an extension

Plain-English summary

The IRS considered a domestic corporation that filed Form 4876-A late and with incomplete information for an election to be treated as an interest charge domestic international sales corporation, or IC-DISC. Based on the submitted facts and representations, it found that the taxpayer met the requirements for relief under Treas. Reg. section 301.9100-3. The IRS granted an additional 60 days from the ruling letter date to file Form 4876-A, and said the filing would be treated as timely for the first taxable year. The ruling did not determine whether the taxpayer otherwise qualified for IC-DISC status or benefits.

Ruling snapshot

• Question: Can a corporation receive more time to file its IC-DISC election?
• Outcome: Approved
• Key authorities: IRC § 992(b); Treas. Reg. §§ 1.921-1T, 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201343015 Third Party Communication: None
Release Date: 10/25/2013 Date of Communication: Not Applicable
Index Number: 9100.22-00, 992.02-00
Person To Contact:
---------------------------------------------------- ---------------------------, ID No. ---------------
-------------------- -----------------
---------------------------------- Telephone Number:
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------------------------------------------------------------ Refer Reply To:

• CC:INTL:B06
  PLR-117146-13
  Date:
  July 29, 2013

                                                         TY: -------
  

  Legend

Taxpayer = ----------------------------------------------------
Law Firm = -------------------------------------------------------------------
Corporation = -----------------------------------------
Date 1 = --------------------
Date 2 = ------------------
Date 3 = -------------------
Date 4 = ----------------------------
Shareholder A = -----------------------
Shareholder B = ---------------------------
Shareholder C = ----------------------------

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

This responds to a letter dated March 4, 2013, submitted by Law Firm requesting that
the Internal Revenue Service (“Service”) grant Taxpayer an extension of time under
Treas. Reg. § 301.9100-3 to file Form 4876-A (“Election To Be Treated as an Interest
Charge DISC”) for Taxpayer’s first taxable year.

The rulings contained in this letter are based upon information and representations
submitted by Taxpayer and Law Firm, and accompanied by affidavits and penalty of
perjury statements executed by appropriate parties. 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-117146-13 2

                                             FACTS

Taxpayer is a domestic corporation with a calendar taxable year. Taxpayer was formed
to serve as an interest charge domestic international sales corporation (“IC-DISC”) and
has established a commission arrangement with Corporation. At the time of Taxpayer’s
formation, on Date 1, Taxpayer and Corporation were each owned by three individual
shareholders: Shareholder A, Shareholder B, and Shareholder C. Law Firm advised
Shareholders A, B, and C of the tax benefits of the IC-DISC regime, and shortly
thereafter Taxpayer was incorporated. On or about Date 2, Shareholder B acquired all
of the shares of Taxpayer and Corporation held by Shareholders A and C and, thus,
became the sole shareholder of Taxpayer and Corporation.

Taxpayer filed Form 4876-A on Date 3, about a month after its incorporation.
Thereafter, Taxpayer filed its Federal income tax returns on Form 1120-IC-DISC
(“Interest Charge Domestic International Sales Corporation Return”). On Date 4,
Taxpayer received a letter from the Service stating that Taxpayer was not eligible to file
Form 1120-IC-DISC because the Form 4876-A that it had filed on Date 3 did not contain
all of the required information. As of Date 4, the period during which Taxpayer could file
a timely Form 4876-A had passed. After contacting the Service center that issued the
letter on Date 4 to discuss possible remedies, Law Firm advised Taxpayer to submit a
request for relief under Treas. Reg. § 301.9100-3 for an extension of time to file the IC-
DISC election effective Date 1.

                                    LAW AND ANALYSIS

Section 992(b)(1)(A) provides that an election by a corporation to be treated as a DISC1
shall be made by such corporation for a taxable year at any time during the 90-day
period immediately preceding the beginning of the taxable year, except that the
Secretary may give his consent to the making of an election at such other times as he
may designate.

Section 992(b)(1)(B) provides that such election shall be made in such manner as the
Secretary shall prescribe and shall be valid only if all persons who are shareholders in
such corporation on such first day of the first taxable year for which such election is
effective consent to such election.

Temp. Treas. Reg. § 1.921-1T(b)(1) provides, in part, that a corporation electing IC-
DISC status must file Form 4876-A and that a corporation electing to be treated as an
IC-DISC for its first taxable year shall make its election within 90 days after the
beginning of that year.

1
As used in this letter, the terms “IC-DISC” and “DISC” have the same meaning.
PLR-117146-13 3

Treas. Reg. § 301.9100-1(c) provides, in part, that the Commissioner, in exercising the
Commissioner’s discretion, may grant a reasonable extension of time under the rules
set forth in Treas. Reg. §§ 301.9100-2 and 301.9100-3 to make a regulatory election
under all subtitles of the Code except subtitles E, G, H, and I.

Treas. Reg. § 301-9100-1(b) provides that a regulatory election is an election whose
due date is prescribed by a regulation published in the Federal Register, or a revenue
ruling, revenue procedure, notice, or announcement published in the Internal Revenue
Bulletin. For this purpose, an election includes an application for relief in respect of tax.

Treas. Reg. § 301.9100-3(a) provides that requests for extensions of time for regulatory
elections that do not meet the requirements of Treas. Reg. § 301.9100-2 (automatic
extensions) must be made under the rules of Treas. Reg. § 301.9100-3. Requests for
relief subject to Treas. Reg. § 301.9100-3 will be granted when the taxpayer provides
the evidence (including affidavits described in Treas. Reg. § 301.9100-3(e)) to establish
to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good
faith, and that the grant of relief will not prejudice the interests of the Government.

Based on the facts and representations submitted with Taxpayer’s ruling request, we
conclude that Taxpayer satisfies Treas. Reg. § 301.9100-3(a). Accordingly, Taxpayer is
granted an extension of time of 60 days from the date of this ruling letter to file
Form 4876-A. Such filing will be treated as a timely election to be treated as an
IC-DISC for Taxpayer’s first taxable year.

The granting of an extension in this ruling letter is not a determination that Taxpayer is
otherwise eligible to make the election or to claim IC-DISC status or benefits. See
Treas. Reg. § 301.9100-1(a). Taxpayer should attach a copy of this ruling letter to its
Federal income tax return for the taxable years to which this letter applies.

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. 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.

In accordance with the Power of Attorney on file with this office, copies of this letter are
being sent to your authorized representatives.

                                Sincerely,


                                _____________________________________
                                Christopher J. Bello
                                Chief, Branch 6
                                Office of Associate Chief Counsel (International)