Foreign entity received 120 days to file corporate classification election

Plain-English summary

A foreign entity intended to elect corporate tax classification effective on a specified date but inadvertently failed to file Form 8832 on time. It represented that it acted reasonably and in good faith, was not using hindsight, and that relief would not prejudice the government. The IRS found the section 301.9100-3 requirements satisfied and granted 120 days to file the election. The entity and its owners also had to file all required original or amended returns for the affected period consistently with the requested classification.

Ruling snapshot

• Request: Extend the deadline for a foreign entity’s Form 8832 election to be taxed as a corporation
• Outcome: Approved; 120 days to file the election and consistent affected returns
• 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: 201543010                                              Third Party Communication: None
Release Date: 10/23/2015                                       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-104946-15
                                                               Date:
                                                               July 20, 2015

LEGEND

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

Country           =        ----------------
Date              =        -------------------

Period            =        ----------------------------------------------------

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

      This responds to a letter dated January 30, 2015, submitted on behalf of X,
requesting an extension of time under § 301.9100-3 of the Procedure and
Administration Regulations to file an 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 to be treated as an association taxable as a corporation for federal
tax purposes effective Date. However, X inadvertently failed to timely file Form 8832,
Entity Classification Election.

         X represents that it acted in good faith and reasonably. Further, X represents
that it is not using hindsight in requesting the relief sought. Lastly, X represents that the
interests of the government will not be prejudiced for all taxable years affected by the
election by granting the relief sought.

LAW AND ANALYSIS
PLR-104946-15                                   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(b)(2) provides guidance on the classification of a foreign
eligible entity for federal tax purposes. Generally, a foreign eligible entity is treated as
an association if all members have limited liability, unless the entity makes an election
to be treated otherwise.

        Section 301.7701-3(c)(1) provides that an entity classification election, or change
in entity classification, 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)(1)(iv) states, in part, if an eligible entity makes an election
to change its classification, the entity cannot change its classification by election again
during the sixty months succeeding the effective date of the election. An election by a
newly formed eligible entity that is effective on the date of formation is not considered a
change for purposes of this paragraph (c)(1)(iv).

        Section 301.7701-3(c)(2)(i) 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
PLR-104946-15                                    3

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,
Entity Classification Election, with the appropriate service center to elect to be treated
as an association taxable as a corporation for federal tax purposes, effective Date. A
copy of this letter should be attached to the Form 8832. A copy is enclosed for that
purpose.

        This ruling is contingent on X and its owners filing within 120 days from the date
of this letter all income tax or information returns, including amended returns, that would
have been required to be filed under the Internal Revenue Code for any taxable year
within Period consistent with the requested relief being effective Date. 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. Further, we express no opinion concerning the assessment of
any interest, additions to tax, additional amounts, or penalties with respect to any
taxable year within Period.

      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)

                                        Laura C. Fields
                                    By: Laura C. Fields
                                    Senior Technician Review, Branch 1
                                    Office of the Associate Chief Counsel
                                    (Passthroughs & Special Industries)
Enclosures (2)
Copy of this letter
Copy of this letter for section 6110 purposes