Extension granted to elect consolidated return filing

Plain-English summary

An affiliated corporate group intended to elect consolidated federal income tax return filing but did not make the election on time. The IRS found that the common parent had reasonably relied on a qualified tax professional, acted reasonably and in good faith, and requested relief before the IRS discovered the failure. It granted 60 days to file the consolidated return and subsidiary consent forms, subject to conditions protecting the government's interests. The ruling did not decide whether the group otherwise qualified to file a consolidated return.

Ruling snapshot

• Question: Could the affiliated group receive additional time to elect consolidated return filing?
• Outcome: Approved
• Key authorities: IRC § 1502; 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: 201550033 Third Party Communication: None
Release Date: 12/11/2015 Date of Communication: Not Applicable
Index Number: 9100.20-00, 1502.75-00
Person To Contact:
------------------------------------ ------------------------, ID No. -------------
------------------------------- Telephone Number:
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------------------------- Refer Reply To:
CC:CORP:4
PLR-121970-15
------------------------ Date:
----------------------------- September 10, 2015

LEGEND

Taxpayer = ------------------------------------
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Year 1 = ------------------------------------------------------------

Date 1 = ---------------------

Company Officials = ----------------------------------------
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Company Employee = ------------------------------------
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Tax Professional = -------------------------------------------
----------------

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

   This letter responds to a letter dated June 19, 2015, submitted on behalf of

Taxpayer, requesting an extension of time under §§ 301.9100-1 through 301.9100.3 of
the Procedure and Administration Regulations to file an election. The extension is being
requested for Taxpayer and the members of its affiliated group (the “Taxpayer Affiliated
Group”) to make an election to file a consolidated federal income tax return, with
Taxpayer as the common parent, under § 1.1502-75(a)(1) of the Income Tax
PLR-121970-15 2

Regulations (the “Election”) for Year 1. The information submitted in that request is
summarized below.

    Taxpayer is the common parent of the Taxpayer Affiliated Group. The Taxpayer

Affiliated Group intended to elect to file a consolidated income tax return, with Taxpayer
as the common parent, for Year 1, but for various reasons, Taxpayer did not timely file
the Election. 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 Taxpayer Affiliated Group’s taxable year for which it
seeks to make the Election.

  Taxpayer 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 the manner provided in § 1.1502-75(b), 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 Taxpayer to file the Election, provided
Taxpayer 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.
PLR-121970-15 3

    Information, affidavits, and representations submitted by Taxpayer, Company

Officials, Company Employee, and Tax Professional explain the circumstances that
resulted in the failure to timely file the Election. The information establishes that
Taxpayer reasonably relied on a qualified tax professional and that the request for relief
was filed before the failure to timely 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 affidavits submitted

and the representations made, we conclude that Taxpayer 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, an extension of time is granted under § 301.9100-3 until 60 days from the
date on this letter for Taxpayer to file the Election by filing a consolidated return, with
Taxpayer as the common parent, and attaching a Form 1122 for each of Taxpayer’s
affiliated subsidiaries for Year 1. Taxpayer must attach a copy of this letter to the return.
Alternatively, if such return is filed electronically, the requirement of attaching a copy of
this letter to the return may be satisfied by attaching a statement to the return that
provides the date and control number [PLR-121970-15] of this letter ruling.

     The above relief is conditioned on the Taxpayer Affiliated Group’s tax liability (if

any) not being 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 Taxpayer Affiliated 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 Taxpayer’s Affiliated

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 Taxpayer, Company Officials, Company
Employee, 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.

  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.
PLR-121970-15 4

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representative.

                                   Sincerely,


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

cc: