Corporation receives extension for IC-DISC election

Plain-English summary

A domestic corporation was formed to serve as an interest charge domestic international sales corporation. Its accounting firm prepared Form 4876-A but recorded the wrong due date, causing the first election to be filed two days late. A later attempted election was also rejected. The IRS concluded that the corporation met the regulatory requirements for relief and granted 60 days to file Form 4876-A, with the filing treated as timely for the corporation's first taxable year. The ruling did not decide whether the corporation otherwise qualified for IC-DISC status.

Ruling snapshot

• Question: May the corporation receive additional time to file its election to be treated as an IC-DISC for its first taxable year?
• Outcome: Approved
• Key authorities: IRC § 992(b)(1)(A); Temp. Treas. Reg. § 1.921-1T(b)(1); Treas. Reg. §§ 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201528002                                              Third Party Communication: None
Release Date: 7/10/2015                                        Date of Communication: Not Applicable
Index Number: 9100.22-00, 992.02-00
                                                               Person To Contact:
--------------------------------------                         ---------------------------, ID No. ---------------
-------------------------------------------                    ----------------
-----------------                                              Telephone Number:
--------------------------                                     --------------------
                                                               Refer Reply To:
In re: --------------------------------------                  CC:INTL:B06
                                                               PLR-101595-15
                                                               Date:
                                                               April 02, 2015



                                                               TY: ------

                                                    LEGEND

Taxpayer =                          --------------------------------------
Company =                           --------------------------
State =                             --------
Accounting Firm =                   -------------------------------------
Date 1 =                            -----------------
Date 2 =                            -----------------------
Date 3 =                            -----------------------
Date 4 =                            --------------------


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

This responds to a letter dated December 24, 2014, submitted by Accounting 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 Accounting Firm and accompanied by 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-101595-15                                         2

                                                 FACTS

Taxpayer is a domestic corporation wholly owned by Company. Taxpayer was formed
to serve as an interest charge domestic international sales corporation (“IC-DISC”) and
has established a commission arrangement with Company. Taxpayer was formed on
Date 1 in State.

Taxpayer relied on Accounting Firm to make the necessary election to qualify Taxpayer
as an IC-DISC. Accounting Firm prepared Form 4876-A and as a result of an oversight,
noted an incorrect due date on the transmittal letter to Taxpayer. The correct due date
was Date 2 and Accounting Firm noted a date three days after Date 2. The election
was filed two days after Date 2.

Taxpayer and Accounting Firm became aware of the late filing when Taxpayer received
a notice from the IRS on Date 3. Accounting Firm then advised Taxpayer to make a
new IC-DISC election to be effective for the next calendar year. The new election was
filed on Date 4. The IRS rejected the second election as being late because the filing
deadline for already existing corporations is 90 days before the beginning of the taxable
year. After the second rejection, Accounting Firm recommended that the best course of
action to remedy the situation was to seek a private letter ruling.

Taxpayer has requested a ruling that grants an extension of time of 60 days from the
date of the ruling letter to file Form 4876-A and that such filing will be treated as a timely
election to be treated as an IC-DISC for Taxpayer’s first taxable year.

                                        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.

Temp. Treas. Reg. § 1.921-1T(b)(1) provides, in part, that a corporation electing IC-
DISC status must file Form 4876-A. 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 his
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-101595-15                                  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 that requested it. Section 6110(k)(3) of the
Code provides that written determinations may not be used or cited as precedent.
Except as expressly provided herein, this ruling neither expresses nor implies any
opinion concerning the tax consequences of any aspect of any transaction or item
discussed or referenced in this ruling letter.

Pursuant to a Power of Attorney on file in this office, copies of this ruling letter are being
furnished to your authorized representatives.


                                        Sincerely,



                                        Marissa K. Rensen
                                        Assistant to the Branch Chief, Branch 6
                                        Office of the Associate Chief Counsel
                                        (International)



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