Foreign entities receive more time to elect corporate classification

Plain-English summary

Foreign eligible entities intended to elect treatment as associations taxable as corporations from a specified date, but they did not timely file valid Forms 8832. The IRS concluded that the requirements for discretionary deadline relief were satisfied. It granted 120 days to file the classification elections with the requested effective date. The relief was conditioned on filing all relevant tax and information returns consistently within the same period.

Ruling snapshot

• Question: Could the foreign entities make late elections to be classified as corporations for federal tax purposes?
• Outcome: Approved, with 120 days to file Forms 8832 and consistent returns.
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, and 301.9100-1 through 301.9100-3

Full text (IRS public release)

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Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201611004 Third Party Communication: None
Release Date: 3/11/2016 Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
--------------------------------------------------------- -------------------, ID No. -----------------
-------------- Telephone Number:
------------------------------ -------- -------------
--------------------------------------- Refer Reply To:
--------------------------------------------- CC:PSI:03
--------------------------------------------- PLR-121966-15, et al.

--------------------------- Date:
--------------------------------------- September 02, 2015

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

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

Country = -----------------

Dear ---------------------------------------

    This responds to a letter dated June 24, 2015, and subsequent correspondence,

submitted on behalf of X, requesting that the Service grant X extensions of time under
§ 301.9100-3 of the Procedure and Administration Regulations to make entity
classification elections to be classified as an association taxable as a corporation for
federal tax purposes.

    The information submitted states that X were formed under the laws of Country.

X represents that, as of Date, X were foreign entities eligible to elect to be treated as
associations taxable as a corporation for federal tax purposes. However, X
inadvertently failed to timely file valid Forms 8832, Entity Classification Election, electing
to treat X as an association taxable as a corporation effective Date.

   Section 301.7701-3(a) provides that a business entity with at least two members

can elect to be classified either as an association (and thus a corporation under
§ 301.7701-2(b)(2)) 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.
PLR-112966-15, et al.

    Section 301.7701-3(a) further provides that so long as a business entity is not

classified as a corporation under § 301-7701-2(b)(1) or (3)-(8) (an “eligible entity”) it
may elect its classification for federal tax purposes.

    Section 301.7701-3(b)(2) provides guidance on the classification of a foreign

eligible entity for federal income 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 to elect to be classified other than as

provided in § 301.7701-3(b), an eligible entity must file Form 8832 with the designated
service center and 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 twelve months
after the date on which the election is filed.

   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.

   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.

    Section 301.9100-3(a) provides that a request for relief under § 301.9100-3 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.

   Based solely on the information submitted and representations made, we

conclude that the requirements of § 301.9100-3 have been satisfied. As a result, X are
granted an extension of time of 120 days from the date of this letter to file a Form 8832
with the appropriate service center and elect to be treated as an association taxable as
a corporation 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 having filed all relevant tax and information returns

consistent with the granted relief with the appropriate service center, within 120 days of
the date of this ruling. A copy of this letter should be attached to any such late or
amended returns. If X fail to comply with this requirement, this letter ruling will be null
and void.
PLR-112966-15, et al.

   Except as expressly provided herein, we express or imply no opinion concerning

the federal tax consequences of any aspect of any transaction or item discussed or
referenced in this letter.

  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 a power of attorney on file with this office, a copy of this letter

is being sent to X’s authorized representatives.

                                              Sincerely,

                                              Associate Chief Counsel
                                              (Passthroughs and Special Industries)



                                       By:    _______________
                                              Bradford R. Poston
                                              Senior Counsel, Branch 3
                                              Office of Associate Chief Counsel
                                              (Passthroughs & Special Industries)

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