IRS grants an LLC extra time to elect partnership tax classification on a late Form 8832

Plain-English summary

A limited liability company wanted to be taxed as a partnership from the day it
was formed, but it never filed the entity classification election form (Form
8832) on time. Under the "check-the-box" rules, an LLC can choose how it is
taxed, and it can ask the IRS for extra time to make a missed election under the
"9100" relief regulations if it acted reasonably and in good faith and relief
won't harm the government. The IRS granted the LLC a 120-day extension to file
Form 8832 electing partnership treatment effective from its formation date. This
matters because without the election, a multi-member LLC defaults to partnership
treatment anyway, but here the taxpayer wanted a specific effective date and the
relief locks that in.

Ruling snapshot

• Question: Should the LLC get an extension of time under Treas. Reg. § 301.9100-3 to file a late entity classification election to be taxed as a partnership?
• Outcome: Approved (120-day extension to file Form 8832 granted)
• Key authorities: Treas. Reg. § 301.7701-3 (entity classification); Treas. Reg. §§ 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201845027
Release Date: 11/9/2018
Index Number: 7701.00-00, 9100.00-00, 9100.31-00

Third Party Communication: None
Date of Communication: Not Applicable

Person To Contact:
--------------------, ID No. ------------------
Telephone Number:

Refer Reply To:
CC:PSI:01
PLR-112039-18

Date:
July 17, 2018

Legend

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

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

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

Dear ------------------,

This responds to a letter dated April 6, 2018, and subsequent correspondence,
submitted on behalf of X, requesting an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations for X to file an entity classification election to
be classified as a partnership for federal tax purposes.

                                                FACTS

The information submitted states that X is a limited liability company formed under the
laws of State on Date 1. X is not classified as a corporation under § 301.7701-2(b)(1),
(3), (4), (5), (6), (7), or (8). X intended to be classified as a partnership, effective on
Date 1. However, X did not timely file Form 8832, Entity Classification Election, electing
to be treated as a partnership.

X represents that it acted reasonably and in good faith, and that the interests of the
government will not be prejudiced by granting relief. X further represents that no
hindsight is involved in seeking the relief requested.

PLR-112039-18 2

                               LAW AND ANALYSIS

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 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) provides that unless the entity elects otherwise, a domestic
eligible entity is (i) a partnership if it has two or more members; or (ii) disregarded as an
entity separate from its owner if it has a single owner.

Section 301.7701-3(c)(1)(i) provides that to elect to be classified other than as provided
in § 301.7701-3(b), an eligible entity must file Form 8832, Entity Classification Election,
with the designated service center. Under § 301.7701-3(c)(1)(iii), this election can be
effective up to seventy-five (75) days prior to the date the form is filed or up to twelve
(12) months after the date on which the form 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.

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

PLR-112039-18 3

extension of time of 120 days from the date of this letter to make an election to be
treated as a partnership for federal tax purposes effective beginning Date 1. X must
make the election by filing a properly executed Form 8832 with the appropriate service
center. A copy of this letter should be attached to the form.

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. In accordance with the
Power of Attorney on file with this office, a copy of this letter is being sent to your
taxpayer representative. Pursuant to 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 & Special Industries)

                                    David R. Haglund

                              By:
                                    David R. Haglund
                                    Branch Chief, Branch 1
                                    (Passthroughs & Special Industries)

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

cc: