A corporation received more time to file its IC-DISC election

Plain-English summary

A domestic corporation was formed to operate as an interest charge domestic international sales corporation, or IC-DISC. Its law firm completed the formation filings but failed to file Form 4876-A, and the omission was discovered about six months later. The IRS found that the corporation acted reasonably and in good faith and that relief would not prejudice the government's interests. It granted 60 days from the ruling date to file the form, which would then be treated as a timely election for the corporation's first taxable year. The ruling did not decide whether the corporation otherwise qualified for IC-DISC status or benefits.

Ruling snapshot

• Question: Could the corporation receive an extension to file Form 4876-A for its first taxable year?
• Outcome: Approved, with 60 days from the ruling date to file.
• Key authorities: IRC § 992(b)(1); Temp. Treas. Reg. § 1.921-1T(b)(1); Treas. Reg. §§ 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201746021                                              Third Party Communication: None
Release Date: 11/17/2017                                       Date of Communication: Not Applicable
Index Number: 9100.22-00, 992.02-00
                                                               Person To Contact:
----------------------------------------                       -----------------------, ID No. -------------------
----------------------------                                   ---------------------------------------------------
--------------------------                                     Telephone Number:
-------------------------------------                          --------------------
                                                               Refer Reply To:
                                                               CC:INTL:B06
-------- -----------------                                     PLR-114853-17
                                                               Date:
                                                               August 18, 2017




                                                               TYE: --------------------------
Legend

Taxpayer =                 ----------------------------------------
Law Firm =                 ------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Accounting Firm = --------------
Company =                  -------------------------------------------
Date 1 =                   -----------------------


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

This responds to letters dated May 2, 2017 and July 24, 2017, submitted by Law Firm
on behalf of Taxpayer requesting that the Internal Revenue Service (“Service”) grant
Taxpayer an extension of time under Treas. Reg. §§ 301.9100-1 and 301.9100-3 to file
Form 4876-A (“Election To Be Treated as an Interest Charge DISC”) for Taxpayer’s first
taxable year.

The ruling contained in this letter is based upon information and representations
submitted by Taxpayer, Law Firm, and Accounting Firm and accompanied by affidavits
and penalty of perjury statements executed by appropriate parties. This office has not
verified any of the materials submitted in support of the request for a ruling. They are
subject to verification on examination.

                                                     FACTS

Taxpayer is a domestic corporation that assists Company with the export of single-
resource commodities that Company produces from mixed recyclables. Company, a
PLR-114853-17                                         2

limited liability company, wholly owns Taxpayer. On Date 1, Taxpayer was incorporated
for the sole purpose of qualifying and operating as an interest charge domestic
international sales corporation (“IC-DISC”). Taxpayer began operating as an IC-DISC
immediately upon its incorporation.

Company had previously engaged Law Firm to prepare the documentation for the
formation of Taxpayer, including the Form 4876-A. Law Firm made all the filings to
incorporate Taxpayer and register Taxpayer with the Service, with the exception of
Form 4876-A.

A review of the files of Law Firm and Accounting Firm was performed roughly six
months after Taxpayer was incorporated and began operating as an IC-DISC. It was
discovered that, through no fault of the Company or Taxpayer, a Form 4876-A had not
been filed. Taxpayer then requested a ruling granting an extension of time to file Form
4876-A for its first taxable year.

                                        LAW AND ANALYSIS

Section 992(b)(1)(A) of the Internal Revenue Code (the “Code”) provides that an
election by a corporation to be treated as a DISC1 shall be made by such corporation for
a taxable year at any time during the 90-day period immediately preceding the
beginning of the taxable year, except that the Secretary may give his consent to the
making of an election at such other times as he may designate.

Section 992(b)(1)(B) of the Code provides that such election shall be made in such
manner as the Secretary shall prescribe and shall be valid only if all persons who are
shareholders in such corporation on such first day of the first taxable year for which
such election is effective consent to such election.

Temporary Treasury Regulation § 1.921-1T(b)(1) provides, in part, that a corporation
electing IC-DISC status must file Form 4876-A and that a corporation electing to be
treated as an IC-DISC for its first taxable year shall make its election within 90 days
after the beginning of that year.

Treasury Regulation § 301.9100-1(c) provides, in part, that the Commissioner, in
exercising the Commissioner’s discretion, may grant a reasonable extension of time
under the rules set forth in Treas. Reg. §§ 301.9100-2 and 301.9100-3 to make a
regulatory election under all subtitles of the Code except subtitles E, G, H, and I.

Treasury Regulation § 301.9100-1(b) provides that a regulatory election is 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

1
    As used in this letter, the terms “IC-DISC” and “DISC” have the same meaning.
PLR-114853-17                                   3

Revenue Bulletin. For this purpose, an election includes an application for relief in
respect of tax.

Treasury Regulation § 301.9100-3(a) provides that requests for extensions of time for
regulatory elections that do not meet the requirements of Treas. Reg. § 301.9100-2
(automatic extensions) must be made under the rules of Treas. Reg. § 301.9100-3.
Requests for relief subject to Treas. Reg. § 301.9100-3 will be granted when the
taxpayer provides the evidence (including affidavits described in Treas. Reg.
§ 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer
acted reasonably and in good faith, and that the grant of relief will not prejudice the
interests of the Government.

Based on the facts and representations submitted with Taxpayer’s ruling request, we
conclude that Taxpayer satisfies Treas. Reg. § 301.9100-3(a). Accordingly, Taxpayer is
granted an extension of time of 60 days from the date of this ruling letter to file
Form 4876-A. Such filing will be treated as a timely election to be treated as an
IC-DISC for Taxpayer’s first taxable year.

The granting of an extension in this ruling letter is not a determination that Taxpayer is
otherwise eligible to make the election or to claim IC-DISC status or benefits. See
Treas. Reg. § 301.9100-1(a). Taxpayer should attach a copy of this ruling letter to its
Federal income tax return for the taxable years to which this letter applies.

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. Except as expressly provided
herein, this letter does not express or imply any opinion concerning the tax
consequences of any aspect of any transaction or item discussed or referenced in this
letter.

In accordance with the Power of Attorney on file with this office, a copy of this ruling
letter is being sent to your authorized representative.

                                   Sincerely,


                                   _____________________________________
                                   Marissa K. Rensen
                                   Senior Counsel, Branch 6
                                   Office of Associate Chief Counsel (International)


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