LLC received 120 days to make a late partnership classification election

Plain-English summary

A limited liability company intended to be treated as a partnership for federal tax purposes from a specified date. It did not file Form 8832, the entity classification election, on time. The IRS concluded from the company's representations that it satisfied the reasonable-cause and government-prejudice standards for discretionary filing relief. It granted 120 days from the ruling date to file Form 8832 electing partnership status effective on the requested date. The ruling did not determine whether the company otherwise qualified to make the election.

Ruling snapshot

• Question: May the LLC file a late Form 8832 electing partnership classification from its intended effective date?
• Outcome: approved, with 120 days to file the election
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                    Department of the Treasury
                                                            Washington, DC 20224

                                                            Third Party Communication: None
Number: 201944005                                           Date of Communication: Not Applicable
Release Date: 11/1/2019
                                                            Person To Contact:
Index Number: 7701.00-00, 9100.31-00                        ------------------------, ID No. -------------------
                                                            ----------------------------------------------------
-------------                                               Telephone Number:
--------------------------------------------------          ---------------------
--------------------------------------                      Refer Reply To:

----------------------                                      CC:PSI:B03
                                                            PLR-102918-19
                                                            Date:
                                                            August 01, 2019




                                                     LEGEND

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

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

Date1             =        ----------------

Date2             =        ----------------------


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

      This letter responds to a letter dated December 19, 2018, and subsequent
correspondence, submitted on behalf of X by X’s authorized representative, requesting
an extension of time under § 301.9100-3 of the Procedure and Administration
Regulations for X to file an entity classification election.

                                                    FACTS

       The information submitted states that X was formed as a limited liability company
under the laws of State on Date1. X represents that it intended to be treated as a
partnership for federal tax purposes effective Date2. However, X did not file Form 8832,
Entity Classification Election, electing to be treated as a partnership effective Date2.

PLR-102918-19                                  2

                                         LAW

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

        Section 301.7701-3(c)(1)(i) provides 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 appropriate service center. Under § 301.7701-3(c)(1)(iii),
this election will be effective on the date specified by the entity on Form 8832 or on the
date filed if no such date is specified. The date specified on Form 8832 cannot be more
than 75 days prior to the date on which the election is filed and no more than 12 months
after the date 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
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) provides
that the term “regulatory election” includes 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 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 extension 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 a taxpayer provides evidence (including affidavits
described in § 301.9100-3(e)) 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 information submitted and the representations made, we
conclude that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a

PLR-102918-19                                 3

result, X is granted an extension of time of 120 days from the date of this letter to file a
Form 8832 with the appropriate service center and elect to be treated as a partnership
for federal tax purposes, effective Date2. A copy of this letter should be attached to the
Form 8832.

       Except as specifically set forth above, no opinion is expressed concerning the
federal tax consequences of the facts described above under any other provision of the
Internal Revenue Code and the regulations thereunder. 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.

       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.

      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, we are a sending
a copy of this letter to X’s authorized representative.

                                       Sincerely,

                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)


                                   By: __________________________
                                       Caroline E. Hay
                                       Assistant to the Branch Chief, Branch 3
                                       Office of Associate Chief Counsel
                                       (Passthroughs & Special Industries)

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