IRS grants more time to elect IC-DISC status

Plain-English summary

The IRS granted a domestic corporation 60 days to file Form 4876-A and make a late election to be treated as an interest charge domestic international sales corporation, or IC-DISC. The corporation assisted a related company with exporting property and intended to operate as an IC-DISC from its formation. The form was misplaced and was not timely filed. The IRS found that the corporation satisfied the requirements for relief and treated the later filing as timely for its first taxable year. The ruling does not determine whether the corporation otherwise qualifies for IC-DISC status or benefits.

Ruling snapshot

• Question: May the corporation file Form 4876-A late and have the election treated as timely for its first taxable year?
• Outcome: Approved, a 60-day extension was granted
• Key authorities: IRC § 992(b)(1); Treas. Reg. §§ 1.921-1T(b)(1) and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201411008 Third Party Communication: None
Release Date: 3/14/2014 Date of Communication: Not Applicable
Index Number: 9100.22-00, 992.02-00
Person To Contact:
-------------------------- -----------------------, ID No. -------------------
---------------------------- ---------------------------------------------------
-------------- Telephone Number:
------------------------- ----------------------
------------------------------- Refer Reply To:
CC:INTL:B06
----------------------------------- PLR-126201-13
Date:
December 03, 2013

Legend

Taxpayer = --------------------------
Consulting Firm A = --------------------------
Consulting Firm B = ----------------------------
Company = ---------------------
Individual A = -----------------------
Individual B = ------------------
Date 1 = ------------------------
Date 2 = --------------------------
Date 3 = --------------------------

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

This responds to a letter dated June 3, 2013, supplemented by letters dated November
18, 2013, November 20, 2013, and November 24, 2013, submitted by Consulting Firm A
and Taxpayer 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, Consulting Firm A, and Consulting Firm B, and accompanied by
affidavits and penalty of perjury statements executed by appropriate parties. This office
has not verified any of the materials submitted in support of the request for rulings. It is
subject to verification on examination.
PLR-126201-13 2

                                             FACTS

Taxpayer is a domestic corporation that assists Company with the export of property.
Individual A wholly owns Taxpayer and Company.

On Date 1, Individual B at Consulting Firm B advised Individual A of the benefits of
forming an interest charge domestic international sales corporation (“IC-DISC”).
Subsequently, Consulting Firm B prepared the necessary documents to establish a
corporate entity that was intended to be treated as an IC-DISC, including Form 4876-A.
Taxpayer was incorporated on Date 2. Taxpayer asserts that the organizational
documents were filed with the proper state authorities and that the Form 4876-A was
filed with the Service on or shortly after Date 2. However, the Form 4876-A was not
timely filed because the file containing the form was misplaced for an undetermined
period of time.1 Believing all requirements for IC-DISC status had been satisfied,
Taxpayer began operating as an IC-DISC as of Date 2.

On Date 3, Taxpayer received a letter from the Service stating that the Service had no
record that a Form 4876-A had been filed. After discovering that the Form 4876-A had
not been filed, Taxpayer requested a ruling granting an extension of time to file
Form 4876-A for its first taxable year.

                                    LAW AND ANALYSIS

Section 992(b)(1)(A) provides that an election by a corporation to be treated as a DISC2
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.

Temporary Treasury Regulation § 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
The record is somewhat unclear as to these details. Nonetheless, we are satisfied from the record that
Taxpayer has asserted that it intended to elect to be treated as a DISC from its inception, it filed the
election with the intent of making the election in a timely manner, and the filing was untimely due to some
inadvertence.
2
As used in this letter, the terms “IC-DISC” and “DISC” have the same meaning.
PLR-126201-13 3

Treasury Regulation § 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.

Treasury Regulation § 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.

Treasury Regulation § 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.

                               Sincerely,


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