IRS grants an extension for an IC-DISC election

Plain-English summary

The IRS granted a domestic corporation an extension of time to file Form 4876-A and make an election to be treated as an interest charge domestic international sales corporation, or IC-DISC. The corporation missed the filing deadline after its representative prepared and mailed the form, but the responsible individual did not file it on time. The IRS found that the corporation acted reasonably and in good faith and that granting relief would not prejudice the government. The extension was limited to 60 days from the ruling letter, and the ruling did not determine whether the corporation otherwise qualified for IC-DISC status or benefits.

Ruling snapshot

• Question: Should the corporation receive more time to file Form 4876-A for its first taxable year?
• Outcome: Approved
• Key authorities: IRC § 992(b)(1); Treas. Reg. §§ 301.9100-1, 301.9100-2, 301.9100-3; Temp. Treas. Reg. § 1.921-1T

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201347018 Third Party Communication: None
Release Date: 11/22/2013 Date of Communication: Not Applicable
Index Number: 9100.22-00, 992.02-00
Person To Contact:
----------------------- ---------------------------, ID No. ---------------
-------------------------------------- -----------------
------------------------------ Telephone Number:
------------------------------ ----------------------
In Re: -------------------------------------- Refer Reply To:
CC:INTL:B06
PLR-135229-13
Date:
August 21, 2013

                                                         TY: -------

Legend

Taxpayer = --------------------------------------
LLC = -------------------------------------------------
Firm = ----------------------
Date 1 = -------------------
Date 2 = --------------------
Date 3 = -----------------------
Date 4 = ----------------------
Individual = -----------------------------

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

This responds to a letter dated July 30, 2013, submitted by Firm requesting that the
Internal Revenue Service (“Service”) grant Taxpayer an extension of time under Treas.
Reg. §§ 301.9100-1 and 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 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.

                                               FACTS

Taxpayer is a domestic corporation with a calendar taxable year. Taxpayer was formed
on Date 1 to serve as an interest charge domestic international sales corporation (“IC-
PLR-135229-13 2

DISC”) and has established a commission arrangement with LLC. LLC owns 100% of
Taxpayer.

Taxpayer was formed as a result of discussions between Individual, an officer of LLC,
and Firm about establishing an IC-DISC to be used in connection with LLC’s export of
beverage products. Firm agreed to prepare the election to treat Taxpayer as an IC-
DISC. On Date 2, Firm contacted Individual to inform her that Form 4876-A had been
prepared and mailed to the attention of Taxpayer’s president and that it was due before
Date 3. It was understood that Individual would be the party responsible for timely filing
the election. At the time, Individual was dealing with several significant personal
matters, including --------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------. Individual
inadvertently missed the deadline for filing Form 4876-A. A few days after Date 3,
Individual discovered her mistake and sent the form to the Service.

On or about Date 4, Taxpayer received a notice from the Service disallowing Taxpayer’s
IC-DISC election because Form 4876-A was not timely filed. Taxpayer sought advice
from Firm, which 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.

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.

1
As used in this letter, the terms “IC-DISC” and “DISC” have the same meaning.
PLR-135229-13 3

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, a copy of this letter is
being sent to your authorized representative.

                                Sincerely,


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