Eligible entity gets extra time to file the Form 8832 electing to be taxed as a corporation

Plain-English summary

A business entity that was eligible to choose its own federal tax
classification wanted to be treated as an association taxable as a
corporation, which it does by filing Form 8832 (the "check-the-box"
election). It intended for that treatment to start on a specific date but
inadvertently failed to file the form on time. The entity asked the IRS for
relief under Treasury Regulation § 301.9100-3, representing that it acted
reasonably and in good faith and that granting relief would not prejudice
the government or involve hindsight. The IRS granted a 120-day extension to
file Form 8832 effective as of the intended date, conditioned on the entity
and its owner filing all consistent returns for open years. As usual, the
IRS did not decide whether the entity is actually eligible to make the
election. Businesses that miss a check-the-box election care because their
default classification (for example, a disregarded entity or partnership)
can carry very different tax consequences from the corporate treatment they
wanted.

Ruling snapshot

• Question: May an eligible entity get more time to file the Form 8832 electing corporate (association) tax treatment?
• Outcome: Approved (120-day extension under § 301.9100-3; eligibility not decided)
• Key authorities: Treas. Reg. § 301.7701-3(c); Treas. Reg. §§ 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201918005 Third Party Communication: None
Release Date: 5/3/2019 Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00
Person To Contact:
---------- ----------,
---------- ID No. ----------
---------- Telephone Number:
----------
Refer Reply To:
CC:PSI:B01
PLR-119149-18
Date:
December 06, 2018

LEGEND

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

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

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

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

  This letter responds to a letter dated May 31, 2018, written on behalf of X,

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 under the laws of State. X

represents that, as of Date, X was a domestic entity eligible to elect to be treated as an
association taxable as a corporation for federal tax purposes. X intended to be treated
as an association taxable as a corporation for federal tax purposes effective Date.
However, X inadvertently failed to timely file Form 8832, Entity Classification Election,
electing to be treated as an association taxable as a corporation 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. Furthermore, X
represents that it acted reasonably and in good faith.
PLR-119149-18 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.

    Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be

classified other than as provided in § 301.7701-3(b) by filing Form 8832 with the
designated service center. 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.

   Section 301.7701-3(c)(2) provides that an election made under § 301.7701-

3(c)(1)(i) must be signed by (A) each member of the electing entity who is an owner at
the time the election is filed; or (B) any officer, manager, or member of the electing
entity who is authorized (under local law or the entity's organizational documents) to
make the election and who represents to having such authorization under penalties of
perjury.

   Under § 301.9100-1(c), 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, except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term
“regulatory election” as including an election whose due date is prescribed by a
regulation published in the Federal Register.

   Sections 301.9100-1 through 301.9100-3 provide the standards that the

Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-1(a). Section 301.9100-2 provides automatic extensions of
time for making certain elections. Section 301.9100-3 provides rules for requesting
extensions of time for regulatory elections that do not meet the requirements of §
301.9100-2.

   Requests for relief under § 301.9100-3 will be granted when the taxpayer

provides evidence to establish that the taxpayer acted reasonably and in good faith, and
that granting relief will not prejudice the interests of the government.

CONCLUSION

  Based solely on the facts submitted and representations made, we conclude that

X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3 and, therefore, it is
granted an extension of time of 120 days from the date of this letter to file a Form 8832
PLR-119149-18 3

to elect to be treated as an association taxable as a corporation for federal tax
purposes, effective Date. A copy of this letter should be attached to the election. A copy
is enclosed for that purpose.

    This ruling is contingent on X and the owner of X filing within 120 days of this

letter all required income tax and information returns for all open years consistent with
the requested relief being effective Date. A copy of this letter should be attached to any
such returns.

   Except as specifically set forth above, we express no opinion concerning the

federal tax consequences of the facts described above under any other provision of the
Internal Revenue Code.

  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 the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representatives.

                                       Sincerely,

                                       Holly Porter
                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)



                                By:    Laura C. Fields
                                       Laura C. Fields
                                       Senior Technician Reviewer, Branch 1
                                       Office of Associate Chief Counsel
                                       (Passthroughs & Special Industries)

Enclosures (2)

   Copy of this letter
   Copy of this letter for section 6110 purposes