Late entity-classification election granted

Plain-English summary

A foreign entity intended to elect corporate classification for federal tax purposes but inadvertently failed to file Form 8832 on time. It represented that it acted reasonably and in good faith and that relief would not prejudice the government. The IRS concluded that the requirements of Treasury Regulation section 301.9100-3 were satisfied and granted 120 days to file the election with the requested effective date. Relief was conditioned on the entity and its owner timely filing all required returns and information forms for open years consistently with the election.

Ruling snapshot

• Question: Whether the entity should receive more time to file its Form 8832 classification election
• Outcome: Approved, with a 120-day filing period and return-filing conditions
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201539014                                              Third Party Communication: None
Release Date: 9/25/2015                                        Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.31-00
                                                               Person To Contact:
----------------------------------                             -----------------------------,
-------------------------------                                ID No. ------------------
-----------------------------------                            Telephone Number:
 ------------------------------------------------              ----------------------
                                                               Refer Reply To:
                                                               CC:PSI:B01
                                                               PLR-108913-15
                                                               Date:
                                                               June 02, 2015



LEGEND

X                 =         -----------------------------------------------------------------------------------------
-------------------------------------------------
---------------------------------------------------
Country           =------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
D                 =----------------------------------------------------------------------------------------------


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

       This responds to a letter dated March 10, 2015 and subsequent correspondence,
submitted on behalf of X, requesting an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations for X to file an entity classification election
under § 301.7701-3(c) to be treated as an association taxable as a corporation for
federal tax purposes.

FACTS

       According to the information submitted, X was formed under the laws of Country.
X intended to elect be treated as an association taxable as a corporation for federal tax
purposes effective D. However, X inadvertently failed to timely file Form 8832, Entity
Classification Election, to elect to be treated as an association taxable as a corporation
for federal tax purposes.

       X represents that it acted reasonably and in good faith. X also represents that
granting the relief requested will not prejudice the interests of the government.

LAW AND ANALYSIS
PLR-108913-15                                  2


        Section 301.7701-3(a) provides in part 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. An eligible entity with at least two
members can elect to be classified as either an association or a partnership, and an
eligible entity with a single owner can elect to be classified as an association or to be
disregarded as an entity separate from its owner. Section 301.7701-3(c) provides that
an entity classification election must be filed on Form 8832 and can be effective up to
75 days prior to the date the form is filed or up to 12 months after the date the form is
filed.

        Section 301.7701-3(c)(2) provides that such an election must be signed by either
(A) each member of the electing entity who is an owner at the time the election is filed;
or (B) any officer, manager, or member of the electing entity who is authorized (under
local law or the entity’s organization documents) to make the election and who
represents to having such authorization under penalties of perjury.

       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.

CONCLUSION

       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 an association taxable as a
corporation for federal tax purposes effective D. A copy of this letter should be attached
to the Form 8832. A copy is enclosed for that purpose.
PLR-108913-15                                  3

        This ruling is contingent on X and its owner filing within 120 days of this letter all
required information and tax returns for all open years consistent with the requested
relief. These returns may include, but are not limited to, the following forms: (i) Forms
5471, Information Return of U.S. Persons With Respect to Certain Foreign
Corporations, (ii) Forms 8865, Return of U.S. Persons With Respect to Certain Foreign
Partnerships, and (iii) Forms 8858, Information Return of U.S. Persons With Respect to
Disregarded Entities, such that these forms reflect the consequences of the relief
granted in this letter. A copy of this letter should be attached to any such returns.

       Except as specifically set forth above, no opinion is expressed or implied
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)
provides that it may not be used or cited as precedent.

       Pursuant to a power of attorney on file with this office, a copy of this letter is
being sent to X's authorized representative.


                                           Sincerely,

                                           Associate Chief Counsel
                                           (Passthroughs & Special Industries)




                                      By: Laura C. Fields
                                          Laura C. Fields
                                          Senior Technician Reviewer, Branch 1
                                          Office of Associate Chief Counsel
                                          (Passthroughs & Special Industries)



Enclosures (2)

       Copy of this letter
       Copy of this letter for section 6110 purposes