Foreign entity gets late disregarded entity election relief

Plain-English summary

A foreign eligible entity missed the deadline to file Form 8832 electing disregarded-entity treatment from its formation date. The IRS concluded from the submitted information and representations that the standards for discretionary filing relief were satisfied. It granted 120 days to file the election. Relief was contingent on the entity's owner filing all required original and amended returns consistently with disregarded treatment, including any appropriate Forms 8858.

Ruling snapshot

• Question: May the foreign eligible entity make a late election to be treated as disregarded?
• Outcome: Approved, conditioned on consistent owner filings within 120 days
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201442011 Third Party Communication: None
Release Date: 10/17/2014 Date of Communication: Not Applicable
Index Numbers: 7701.00-00, 9100.00-00,
9100.31-00 Person To Contact:
----------------------, ID No. ----------------
------------------------------------------------------------ Telephone Number:
------------------- --------------------
---------------------------------------------------- Refer Reply To:
-------------------------------- CC:PSI:B03
---------------------------- PLR-106666-14
Date:
July 14, 2014

                                                LEGEND

X = -----------------------------------------------------------------------------------------------
------------------------------

Country = ---------

Date = ------------------

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

    This letter responds to a letter dated February 12, 2014, submitted on behalf of X

by its authorized representative, requesting that X be granted an extension of time
under § 301.9100-3 of the Procedure and Administration Regulations to elect to be
treated as a disregarded entity under § 301.7701-3.

                                                 FACTS

    X was formed under the laws of Country on Date. X represents that it is a foreign

entity eligible to elect to be classified as a disregarded entity for federal tax purposes.
However, X failed to timely file Form 8832, Entity Classification Election, to be treated
as a disregarded entity for federal tax purposes effective Date.

                                       LAW AND ANALYSIS

    Section 301.7701-3(a) provides 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 as provided in § 301.7701-3. An eligible
PLR-106666-14 2

entity with a single owner can elect to be classified as an association (and thus a
corporation under § 301.7701-2(b)(2)) or to be disregarded as an entity separate from
its owner.

     Section 301.7701-3(b)(2)(i) provides that, unless it elects otherwise, a foreign

eligible entity is (A) a partnership if it has two or more members and at least one
member does not have limited liability; (B) an association if all members have limited
liability; or (C) disregarded as an entity separate from its owner if it has a single owner
that does not have limited liability. Section 301.7701-3(b)(2)(ii) provides that for
purposes of § 301.7701-3(b)(2)(i), a member of a foreign eligible entity has limited
liability if the member has no personal liability for the debts of or claims against the
entity by reason of being a member.

    Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be

classified other than as provided under § 301.7701-3(b), or to change its classification,
by filing Form 8832 with the service center designated on Form 8832.

    Section 301.7701-3(c)(1)(iii) provides that an election made under § 301.7701-

3(c)(1)(i) will be effective on the date specified by the entity on Form 8832 or on the
date filed if no such date is specified on the election form. The effective date specified
on Form 8832 can not be more than 75 days prior to the date on which the election is
filed and can not be more than 12 months after the date on which the election is filed. If
an election specifies an effective date more than 75 days prior to the date on which the
election is filed, it will be effective 75 days prior to the date it was filed.

   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 an
election. Section 301.9100-2 provides automatic extensions of time for making certain
elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.

    Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3

will be granted when the taxpayer provides the evidence (including affidavits described
in § 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the
taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the
interests of the Government.

                                  CONCLUSION

    Based solely on the information submitted and the representations made, we

conclude that the requirements of §§ 301.9100-1 and 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
PLR-106666-14 3

disregarded entity effective Date. A copy of this letter should be attached to the Form
8832.
This ruling is contingent on the owner of X filing within 120 days of this letter all
required returns and amended income tax returns consistent with the requested relief
effective Date. To the extent appropriate, these returns must include, but are not limited
to, Forms 8858, Information Return of U.S. Persons With Respect To Foreign
Disregarded Entities, such that these forms reflect the consequences of the relief
granted in this letter.

    Except as expressly provided herein, we express or imply no opinion 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 a power of attorney on file with this office, we are sending a

copy of this letter to your authorized representative.

   The ruling contained in this letter is 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 ruling request, it is subject to verification on examination.

                                   Sincerely,

                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)



                        By:        _______________________________________
                                   James A. Quinn
                                   Senior Counsel, Branch 3
                                   Office of the Associate Chief Counsel
                                   (Passthroughs & Special Industries)

Enclosures (2)

   Copy of this letter
   Copy for § 6110 purposes

cc: