LLC receives 120 days for association election

Plain-English summary

A single-owner domestic limited liability company intended to be classified as an association for federal tax purposes from its formation date. Because of inadvertence, it did not file Form 8832 on time. The IRS found that the company met the standards for discretionary filing relief and granted 120 days to submit the election with the intended effective date. Relief was conditioned on filing all required federal income tax and information returns, including amended returns, consistently with association status within the same 120-day period. The ruling did not decide whether penalties or other filing consequences could apply.

Ruling snapshot

• Question: May the LLC file a late Form 8832 election to be classified as an association?
• Outcome: approved
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3; IRC § 6110(k)(3)

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201742005                                              Third Party Communication: None
Release Date: 10/20/2017                                       Date of Communication: Not Applicable
Index Numbers: 9100.00-00, 9100.31-00
                                                               Person To Contact:
-----------------------------------------------------------    --------------------------, ID No. --------------
------------------------------------------------------------   Telephone Number:
----------                                                     ----------------------
------------------------------------------                     Refer Reply To:
--------------------------------                               CC:PSI:B03
                                                               PLR-102620-17
                                                               Date:
                                                               July 24, 2017




                                                    LEGEND

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

Y              =       --------------------------------------------------------

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

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



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

        This letter responds to a letter dated January 6, 2017, submitted on behalf of X
by its authorized representative, requesting an extension of time under § 301.9100-3 of
the Procedure and Administration Regulations to file an election under § 301.7701-3 to
treat X as an association for federal tax purposes.

                                                  FACTS

       X is a State limited liability company formed on Date 1. Since Date 1, X has
been wholly owned by Y. X intended to be classified as an association effective Date 1.
However, due to inadvertence, X failed to file timely a Form 8832, Entity Classification
Election, effective Date 1.

                                              LAW AND ANALYSIS
PLR-102620-17                              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 as provided in § 301.7701-3. An eligible
entity with at least two members can elect to be classified as either 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.

       Section 301.7701-3(b)(1)(ii) provides that unless a domestic eligible entity elects
otherwise, the entity is disregarded as an entity separate from its owner if it has a single
owner.

        Section 301.7701-3(c)(1)(i) provides, in part, that an eligible entity may elect to
be classified other than as provided under § 301.7701-3(b), or to change its
classification, by filing Form 8832 with the service center designated on Form 8832.

         Section 301.7701-3(c)(1)(iii) provides that an election made under
§ 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on Form 8832
or on the date filed if no such date is specified on the election form. The effective date
specified on Form 8832 can not be more than 75 days prior to the date on which the
election is filed and can not be more than 12 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
six months except in the case of a taxpayer who is abroad), under all subtitles of the
Internal Revenue Code (Code), except subtitles E, G, H, and I. Section 301.9100-1(b)
defines a regulatory election as an election whose due date is prescribed by a
regulation published in the Federal Register, or 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 extensions of time for making regulatory elections
that do not meet the requirements of § 301.9100-2. Section 301.9100-3(a) provides
that requests for relief subject to § 301.9100-3 will be granted when the taxpayer
provides the evidence (including affidavits described in § 301.9100-3(e)) to establish to
the satisfaction of the Commissioner that the taxpayer acted reasonably and in good
faith, and the grant of relief will not prejudice the interests of the Government.
PLR-102620-17                                 3

                                      CONCLUSION

        Based solely on the information submitted and the representations made, we
conclude that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a
result, X is granted an extension of time of 120 days from the date of this letter to file a
properly executed Form 8832 with the appropriate service center electing to be
classified as an association effective Date 1. A copy of this letter should be attached to
the Form 8832.

       This ruling is contingent on X filing within 120 days of the date of this letter all
required federal income tax and information returns (including amended returns) for all
years consistent with the requested relief. A copy of this letter should be attached to
any such returns.

        We express no opinion concerning the assessment of any interest, additions to
tax, additional amounts, or penalties for failure to file a timely income tax or information
return with respect to any taxable year that may be affected by this ruling. For example,
we express no opinion as to whether a taxpayer is entitled to relief from any penalty on
the basis that the taxpayer had reasonable cause for failure to file timely any income tax
or information returns.

       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. In addition, § 301.9100-1(a) provides that the granting of an
extension of time for making an election is not a determination that the taxpayer is
otherwise eligible to make the election.

      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.

        Pursuant to a power of attorney on file with this office, we are sending a copy of
this letter to X’s authorized representatives.
PLR-102620-17                               4


       The ruling contained in this letter is based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the ruling request, it is subject to verification on examination.

                                     Sincerely,

                                     Associate Chief Counsel
                                     (Passthroughs & Special Industries)



                                By: ___________________________________
                                    Mary Beth Carchia
                                    Senior Technician Reviewer, Branch 3
                                    Office of the Associate Chief Counsel
                                    (Passthroughs & Special Industries)



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