Affiliated group receives more time to elect consolidated filing

Plain-English summary

A parent corporation and subsidiary intended to file a consolidated federal income tax return but failed to make the required election on time. The parent showed that it reasonably relied on a qualified tax professional who failed to make, or advise it to make, the election, and it requested relief before the IRS discovered the failure. The IRS concluded that the parent acted reasonably and in good faith and that relief would not prejudice the government. It granted 60 days to file the election by amending the consolidated return and attaching the required consent, subject to substantive eligibility and a condition protecting the government’s aggregate tax position.

Ruling snapshot

• Question: Should the affiliated group receive an extension under Treas. Reg. § 301.9100-3 to elect consolidated-return filing?
• Outcome: Approved
• Key authorities: IRC § 1502; Treas. Reg. §§ 1.1502-75(a)(1), 1.1502-75(b), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201601007 Third Party Communication: None
Release Date: 12/31/2015 Date of Communication: Not Applicable
Index Number: 1502.75-00, 9100.20-00
Person To Contact:
-------------- ----------------------, ID No. -------------
------------------------------ Telephone Number:
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--------------------------------------- Refer Reply To:
------------------------------ CC:CORP:B04
PLR-115882-15
Date:
September 29, 2015

Legend

Parent = ---------------------------------------------------------------------------------------
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Subsidiary = ---------------------------------------------------------------------------------------
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Date 1 = ---------------------------

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

Company Official = ---------------------------------------------------------------------------------------
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Tax Professional = ---------------------------------------------------------------------------------------
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Dear ------------:

     This letter responds to a letter submitted on behalf of Parent, requesting an

extension of time under § 301.9100-3 of the Procedure and Administration Regulations
to file an election. The extension is being requested for Parent and Subsidiary to elect
to file a consolidated Federal income tax return under § 1.1502-75(a)(1) of the Income
Tax Regulations, with Parent as the common parent, (hereinafter referred to as “the
PLR-115882-15 2

Election”), for the taxable year ending Date 2. The material information submitted for
consideration is summarized below.

    For the period Date 1 to Date 2, Parent was the common parent of an affiliated

group, consisting of Parent and Subsidiary. Parent and Subsidiary intended to file a
consolidated income tax return, with Parent as the common parent, for the taxable year
Date 1 to Date 2. The Election was due on the last day prescribed by law (including
extensions of time) for filing Parent's return but for various reasons Parent 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 Parent affiliated group's taxable year for which it wants
to make the Election.

  Parent represents that it does not seek to alter a return position for which an

accuracy-related penalty has been or could have been imposed under § 6662 of the
Code.

    Section 1.1502-75(a)(1) provides that a group 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 no later than the last day
prescribed by law (including extensions of time) for filing 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 the Parent affiliated group to file the
Election, provided Parent shows it acted reasonably and in good faith, the requirements
PLR-115882-15 3

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 Parent, Company

Official and Tax Professional explain the circumstances that resulted in the failure to
timely file a valid Election. The information establishes that the request for relief was
filed before the failure to timely make the Election was discovered by the Internal
Revenue Service and that Parent reasonably relied on a qualified tax professional, who
failed to make, or advise Parent to make, the Election. 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 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 Parent and Subsidiary qualify substantively to file a consolidated return for the
applicable tax year, an extension of time is granted under § 301.9100-3, until 60 days
from the date on this letter, for Parent to file the Election, by filing a consolidated return,
with Parent as the common parent, and attaching a Form 1122 for Subsidiary for the
taxable year ending Date 2. Parent and Subsidiary, having already filed a consolidated
return for the tax year, must amend the return by attaching a copy of this letter to the
return, or 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-115882-15) of this letter ruling.

     The above extension of time is conditioned on the Parent 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). We express no opinion as to the Parent 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 income tax returns involved.

   Except as expressly provided herein, no opinion is expressed or implied

concerning the tax consequences of any item discussed or referenced in this letter. In
particular, we express no opinion with respect to whether Parent and Subsidiary qualify
substantively to make the Election. 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 Internal Revenue Code or regulations, or as to the tax treatment
of any conditions existing at the time of, or resulting from, filing the return or the Election
late that are not specifically set forth in this letter.

    For purposes of granting relief under § 301.9100-3, we relied on certain

statements and representations made under penalty of perjury by Parent, Company
Official and Tax Professional. The Director, however, should verify all essential facts.
PLR-115882-15 4

    In addition, notwithstanding that an extension is granted under § 301.9100-3 to

file the Election, any penalties and interest that would otherwise be applicable continue
to apply.

  This letter ruling is directed only to the taxpayer who requested it. Section

6110(k)(3) 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)