New corporate group received 60 days to elect consolidated filing

Plain-English summary

A newly formed parent became the common parent of an affiliated group but did not timely file the consolidated return that would make the group’s election to file together. The parent requested regulatory relief before the IRS discovered the failure and represented that it was not changing a position subject to an accuracy-related penalty. The IRS found that the group reasonably relied on a qualified tax professional, acted reasonably and in good faith, and met the section 301.9100-3 standards. It granted 60 days to file the consolidated return with Forms 1122 for the subsidiaries. Relief was conditioned on substantive eligibility and on aggregate tax liability not being lower than it would have been with a timely election.

Ruling snapshot

• Request: Extend the deadline to elect consolidated return filing
• Outcome: Approved; 60 days to file the consolidated return and subsidiary consents
• Key authorities: Treas. Reg. §§ 1.1502-75, 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                          Department of the Treasury
                                                                  Washington, DC 20224

Number: 201542005                                                 Third Party Communication: None
Release Date: 10/16/2015                                          Date of Communication: Not Applicable
Index Number: 9100.20-00, 1502.75-00
                                                                  Person To Contact:
------------------------------------                              ----------------, ID No. ------------------
----------------------------------------                          Telephone Number:
------------------------------                                    ----------------------
                                                                  Refer Reply To:
-----------------------------------------------------             CC:CORP:B04
                                                                  PLR-103331-15
                                                                  Date:
                                                                  July 22, 2015




Legend

New Parent                 =         ------------------------------------
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Date 1                     =        ---------------------

Date 2                     =        ----------------------------

Date 3                     =        ---------------------------

Company Officials =                  -----------------------
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                                     ----------------------
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Tax Professional           =         -------------------
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Dear -----------------:

This letter responds to a letter from your authorized representative, dated January 9,
2015, requesting an extension of time under §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to file an election. The extension is being
requested for New Parent and its affiliated subsidiaries (the “New Parent Group”) to
make an election to file a consolidated Federal income tax return, with New Parent as
the common parent, under § 1.1502-75(a)(1) of the Income Tax Regulations (the
PLR-103331-15                                2

“Election”), for the taxable year ending Date 3. The material information provided in that
letter and in a supplemental letter dated July 17, 2015, is summarized below.
New Parent was formed on Date 1. Through a series of transactions culminating on
Date 2, New Parent became the common parent of an affiliated group (“New Parent
Group”).

An election for the New Parent Group to file a consolidated income tax return, with New
Parent as the common parent, for the taxable year ending Date 3, was required to be
filed no later than the last day prescribed by law (including extensions of time) for the
filing of New Parent's return. However, for various reasons, a valid Election (i.e., the
filing of the consolidated return) was not filed by the due date of New Parent's return.
Subsequently, this request was submitted, under § 301.9100-3, for an extension of time
to file the Election. The period of limitations on assessment under § 6501(a) has not
expired for the taxable year ending Date 3 or any subsequent taxable year. New Parent
has represented that it does not seek to alter a return position for which an accuracy-
related penalty has been or could be imposed under § 6662.

Section 1.1502-75(a)(1) of the Income Tax Regulations provides, in part, that an
affiliated group of corporations which did not file a consolidated return for the
immediately preceding taxable year may file a consolidated return in lieu of separate
returns for the taxable year, provided that each corporation which has been a member
of the group during any part of the taxable year for which the consolidated return is to
be filed consents, in accordance with § 1.1502-75(b) of the regulations, to the
regulations under § 1502. If a group wishes to exercise its privilege of filing a
consolidated return, such consolidated return must be filed not later than the last day
prescribed by law (including extensions of time) for the filing of the common parent's
return.

Under § 301.9100-1(c), the Commissioner has discretion to grant a reasonable
extension of time to make a regulatory election or a statutory election (but no more than
six 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.

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 a regulatory election.
Section 301.9100-1(a). Section 301.9100-2 provides automatic extensions of time for
making certain elections. Requests for relief under § 301.9100-3 will be granted when
the taxpayer provides evidence to establish to the satisfaction of the Commissioner that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the government. Section 301.9100-3(a).

In this case, the time for filing the Election is fixed by the regulations (i.e., § 1.1502-
75(a)(1)). Therefore, the Commissioner has discretionary authority under § 301.9100-3
to grant an extension of time for New Parent to file the Election, provided New Parent
PLR-103331-15                                 3

shows it acted reasonably and in good faith, the requirements of §§ 301.9100-1 and
301.9100-3 are satisfied, and granting relief will not prejudice the interests of the
government.

Information, affidavits, and representations submitted by New Parent, Company
Officials, and Tax Professional explain the circumstances that resulted in the failure to
timely file the Election. The information establishes that the taxpayers reasonably relied
on a qualified tax professional who failed to make, or advise the taxpayers to make, the
Election, and that the request for relief was filed before the failure to make the Election
was discovered by the Internal Revenue Service. See § 301.9100-3(b)(1)(i) and (v).

Based on the facts and information submitted, including the representations made, we
conclude that New Parent has shown it acted reasonably and in good faith, the
requirements of §§ 301.9100-1 and 301.9100-3 are satisfied, and granting relief will not
prejudice the interests of the government. Accordingly, provided that the New Parent
Group qualifies substantively to file a consolidated return for the applicable taxable year,
we grant an extension of time, under § 301.9100-3, for sixty (60) days from the date on
this letter, for New Parent to file the Election (by filing a consolidated return, with New
Parent as the common parent, and attaching a Form 1122 for each of its affiliated
subsidiaries for the taxable year ending Date 3). The New Parent Group must attach a
copy of this ruling letter to such return, or if the New Parent Group files the return
electronically, a statement must be attached to the return that provides the date and the
control number (PLR-103331-15) of this ruling letter.

The above extension of time is conditioned on the New Parent Group's tax liability (if
any) being not lower, in the aggregate, for all years to which the Election applies, than it
would have been if the Election had been timely made (taking into account the time
value of money). No opinion is expressed as to the New Parent Group's tax liability for
the years involved. A determination thereof will be made by the applicable Director's
office upon audit of the Federal income tax returns involved.

We express no opinion with respect to whether, in fact, the New Parent Group qualifies
substantively to file a consolidated return. In addition, we express no opinion as to the
tax effects or consequences of filing the return or the Election late under the provisions
of any other section of the Code or regulations, or as to the tax treatment of any
conditions existing at the time of, or effects resulting from, filing the return or the
Election late that are not specifically set forth in the above ruling.

For purposes of granting relief under § 301.9100-3, we relied on certain statements and
representations made by New Parent, Company Officials, and Tax Professional.
However, the Director should verify all essential facts. In addition, notwithstanding that
an extension is granted under § 301.9100-3 to file the Election, penalties and interest
that would otherwise be applicable, if any, continue to apply.
PLR-103331-15                                 4

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 the Power of Attorney on file with this office, copies of this letter are
being sent to your authorized representatives.


                                       Sincerely,


                                       ___________________________
                                       Ken Cohen
                                       Senior Technician Reviewer, Branch 3
                                       Office of Associate Chief Counsel (Corporate)

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