PLR 1347008: IRS grants 120 days to make a late foreign-entity partnership election

Plain-English summary

A foreign eligible entity missed the deadline to file Form 8832 electing partnership classification for federal tax purposes. The entity asked for relief under the regulations that permit an extension for a late regulatory election when the taxpayer acted reasonably and in good faith and the government is not prejudiced. The IRS found that the requirements were satisfied and granted 120 days from the ruling date to file the form, effective as of the entity's formation date. The relief requires the entity's owners to file required returns and amended returns consistently with the election, including filings that may arise under sections 6036, 6038B, and 6046A.

Ruling snapshot

• Question: May the foreign entity receive more time under Treas. Reg. § 301.9100-3 to elect partnership treatment under Treas. Reg. § 301.7701-3(c)?
• Outcome: Approved, 120-day extension granted
• Key authorities: IRC § 7701; Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3; IRC §§ 6036, 6038B, and 6046A

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201347008 Third Party Communication: None
Release Date: 11/22/2013 Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.31-00
Person To Contact:
------------------------------------------------------ ----------------------, ID No. --------------
------------------------------- Telephone Number:
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----------------------------------------- Refer Reply To:
CC:PSI:B2
PLR-111643-13
Date: August 8, 2013

Legend

X: --------------------------------

Country: -----------------------

Date 1: ---------------------------

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

   This responds to a letter dated March 11, 2013, and subsequent correspondence

submitted on behalf of X, requesting that the Service grant X an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations to elect to be treated as
a partnership under § 301.7701-3(c).

    The facts submitted and representations made are summarized as follows. X

was formed on Date 1 under the laws of Country. X is a foreign entity eligible to elect to
be treated as a partnership effective Date 1. However, X inadvertently failed to timely
file a Form 8832, Entity Classification Election.

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

entity for federal income tax purposes. Generally, a foreign eligible entity is treated as
an association taxable as a corporation if all members have limited liability, unless the
entity makes an election to be treated otherwise. If the foreign eligible entity has more
than one owner, it may elect to be treated as a partnership pursuant to the rules in
§ 301.7701-3(c).

PLR-111643-13 2

   Section 301.7701-3(c) provides that an entity classification election must be filed

on Form 8832 and can be effective up to seventy-five (75) days prior to the date the
form is filed or up to twelve (12) months after the date on which 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
6 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 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.

    Sections 301.9100-1 through 301.9100-3 provide the standards the

Commissioner will use to determine whether to grant an extension of time to make the
election. Section 301.9100-2 provides the rules governing automatic extensions of time
for making certain elections. Section 301.9100-3 provides the standards the
Commissioner will use to determine whether to grant an extension of time for regulatory
elections that do not meet the requirements of § 301.9100-2. Under § 301.9100-3, a
request for relief will be granted when the taxpayer provides evidence to establish to the
satisfaction of the Commissioner 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 information 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 file a Form 8832
with the appropriate service center to elect to be treated as a partnership for federal tax
purposes effective Date 1. A copy of this letter should be attached to the Form 8832. A
copy is enclosed for that purpose.

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

required returns and amended income tax returns consistent with the requested relief.
The owners’ filing obligations may include those required under §§ 6036, 6038B,
6046A, and the regulations thereunder. A copy of this letter should be attached to any
such returns.

   Except as specifically set forth above, no opinion is expressed concerning the

federal tax consequences of the facts described above under any other provision of the
Code.

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)

provides that it may not be used or cited as precedent.

PLR-111643-13 3

   Pursuant to a power of attorney on file with this office, copies of this letter are

being sent to X’s authorized representative.

                                           Sincerely,

                                           Associate Chief Counsel
                                           (Passthroughs and Special Industries)

                                       By: __________________
                                          Bradford R. Poston
                                          Senior Counsel, Branch 2
                                          Office of the Associate Chief Counsel
                                          (Passthroughs & Special Industries)

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