Late disregarded-entity election receives 120-day extension

Plain-English summary

A single-member LLC intended to be treated as a disregarded entity but did not timely file Form 8832. It represented that it acted reasonably and in good faith and that granting relief would not prejudice the government. The IRS concluded that section 301.9100-3 was satisfied and allowed 120 days to file the entity-classification election with the requested effective date. The owner also had to file all required original or amended returns for open years consistently with the requested treatment within that period.

Ruling snapshot

• Question: May the LLC file a late Form 8832 electing disregarded-entity status?
• Outcome: Yes, with 120 days to file the election and consistent returns for all open years.
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                         Department of the Treasury
                                                                 Washington, DC 20224

Number: 201608003                                                Third Party Communication: None
Release Date: 2/19/2016                                          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-118899-15
                                                                 Date:
                                                                 November 17, 2015




Legend

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

         State             =        ----------

         Date              =        ------------------


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

       This letter responds to your letter dated June 2, 2015, submitted on behalf of X
by X’s representative, 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 a disregarded entity for Federal tax purposes.

                                                         Facts

       According to the information submitted, X is a single member LLC formed under
the laws of State on Date. X intended to be treated as a disregarded entity for Federal
tax purposes effective Date.

      X represents that granting relief to allow it to file a late election to be treated as a
disregarded entity will not prejudice the interests of the government. In addition, X
represents that it acted reasonably and in good faith.

                                                 Law and Analysis


PLR-118899-15                                  2

        Section 301.7701-3(a) provides 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 taxable as a corporation or
a partnership.

        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 taxable as a corporation if all members have limited liability, unless the
entity makes an election to be treated otherwise.

       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.

        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 facts 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 as a disregarded entity 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 the owner of X filing within 120 days of this letter all
required returns or amended returns for all open years consistent with the requested
relief.

       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(s) requesting it. Section 6110(k)(3) of
the Code provides that it may not be used or cited as precedent.


PLR-118899-15                                  3

         In accordance with the 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)


                                        David R. Haglund
                                        By: David R. Haglund
                                        Chief, Branch 1
                                        Office of the Associate Chief Counsel
                                        (Passthroughs & Special Industries)

Enclosures (2):
      Copy of this letter
      Copy for § 6110 purposes

cc: