LLC received late Form 8832 corporate classification relief

Plain-English summary

A limited liability company intended to be taxed as an association taxable as a corporation, but its advisers did not tell it to file Form 8832. The company represented that it had always intended corporate classification, acted reasonably and in good faith, and would not obtain a lower aggregate tax liability from late relief. The IRS found that the requirements of Treas. Reg. § 301.9100-3 were satisfied. It granted 120 days to file Form 8832 with the requested effective date and required all consistent returns or amended returns to be filed within the same period.

Ruling snapshot

• Question: Could the LLC file a late election to be classified as an association taxable as a corporation?
• Outcome: Approved. The LLC received 120 days to file Form 8832 and all required consistent returns.
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201908010
Third Party Communication: None
Release Date: 2/22/2019
Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.31-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B03
PLR-115267-18
Date:
October 31, 2018

Legend

X = ----------------------------------------------------------------------------------------------
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State = ----------
Date 1 = -----------------

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

This letter responds to your letter dated April 30, 2018, 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 an association taxable as a corporation for federal tax purposes.

FACTS

According to the information submitted, X was formed as a limited liability company in State. X intended to be treated as an association taxable as a corporation for federal tax purposes effective Date. X represents that at all times it intended to be treated as an association; however, X’s advisors failed to advise X of the requirement that X elect to be an association for federal tax purposes by filing Form 8832, Entity Classification Election, effective as of Date. Consequently, X did not file an election to be classified as an association for federal tax purposes.

X represents that granting relief will not prejudice the interests of the government and that hindsight is not involved in seeking relief to file a late election. X further represents that such relief would not result in a lower tax liability in the aggregate for all years to which the request applies. Finally, X represents that it acted reasonably and in good faith.
PLR-115267-18
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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 taxable as a corporation or a partnership.

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. Accordingly, X is granted an extension of time of 120 days from the date of this letter to elect to be classified as an association taxable as a corporation for federal tax purposes effective Date. The election should be made by filing a Form 8832 with the appropriate service center and a copy of this letter should be attached to the election.

This ruling is contingent on X filing within 120 days of this letter all required returns or amended returns consistent with the requested relief in this letter.

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 X's authorized representative.
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In accordance with a power of attorney on file with this office, we are sending a copy of this letter to your authorized representatives.

Sincerely,
Associate Chief Counsel
(Passthroughs & Special Industries)

By:
Adrienne M. Mikolashek
Branch Chief, Branch 3
(Passthroughs & Special Industries)

Enclosures (2)
Copy of Letter
Copy for 6110 purposes