A foreign single-member entity gets 9100 relief to file a late Form 8832 electing to be taxed as a corporation

Plain-English summary

A foreign business entity became relevant for U.S. tax purposes when a U.S. corporation acquired all of its interests. As a single-owner foreign entity with unlimited liability, its default classification is "disregarded" (treated as part of its owner), but it wanted to be classified as an association, meaning taxed as a corporation. To change that default it had to file Form 8832, the entity classification election, but it missed the deadline. It asked for relief under Treasury Regulation 301.9100-3, which lets the IRS extend the time to make a regulatory election if the taxpayer acted reasonably and in good faith and granting relief won't prejudice the government. The IRS granted the relief: the entity has 120 days from the date of the letter to file Form 8832 electing association status, effective the acquisition date. The ruling only extends the filing deadline; it does not decide whether the entity is otherwise eligible to make the election or address any other tax consequences.

Ruling snapshot

• Question: Should the IRS grant an extension of time under Treas. Reg. § 301.9100-3 for a foreign entity to file a late Form 8832 electing to be classified as an association (corporation)?
• Outcome: Approved (120-day extension to file Form 8832)
• Key authorities: Treas. Reg. § 301.7701-3(a), (b)(2), (c); § 301.9100-1, § 301.9100-3; IRC § 7701

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202144013 Third Party Communication: None
Release Date: 11/5/2021 Date of Communication: Not Applicable
Index Number: 9100.31-00, 7701.00-00
Person To Contact:
---------------------------------- -----------------------, ID No. -----------------
------------------------------------------- Telephone Number:
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---------------- Refer Reply To:
CC:PSI:B03
PLR-103146-21
Date:
August 11, 2021

Legend
X = ------------------------------------------------------------------------------------------------
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Y = ------------------------------------------------------------------------------------------------
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Date 1 = -------------------------

Date 2 = --------------------------

Country = ---------

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

   This letter responds to a letter dated February 3, 2021 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 to file an election under § 301.7701-3 to
be treated as an association for federal income tax purposes.

                                                  FACTS

   According to the information submitted, X was formed on Date 1 under the laws

of Country. On Date 2, Y, a U.S. corporation, acquired all of the interests in X, and X
became relevant, within the meaning of § 310.7701-3(d), for U.S. federal tax purposes
as of Date 2. X states that under § 301.7701-3(b)(2), it is a foreign eligible entity owned
by a single member with unlimited liability and its default classification is an entity
disregarded from its owner for federal tax purposes. X intended to be classified as an
association for federal tax purposes effective Date 2. However, X did not timely file
PLR-103146-21 2

Form 8832, Entity Classification Election, to elect to be classified as an association
effective Date 2.

   X represents that it acted reasonably and in good faith. Further, X represents

that the interests of the Government will not be prejudiced for the taxable years affected
by the election by granting the relief sought.

                                        Analysis

    Section 301.7701-3(a) provides, in part, 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 as provided in
§ 301.7701-3. An eligible entity with at least two members can elect 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)(2) provides guidance on the classification of a foreign

eligible entity for federal tax purposes. Generally, a foreign eligible entity is treated as
disregarded as an entity separate from its owner if it has a single owner that does not
have limited liability. If all members of the foreign eligible entity have limited liability it
may elect to be treated as an association pursuant to the rules in § 301.7701-3(c).

    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 cannot be more than 12
months after the date on which 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 (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 an
election. Section 301.9100-2 provides the standards the Commissioner will use to
determine whether to grant an 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
PLR-103146-21 3

requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted
when the taxpayer provides evidence (including affidavits described in § 301.9100-3(e))
to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably
and in good faith, and the grant of 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
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 to elect to be classified as an association
for U.S. federal tax purposes, effective Date 2. A copy of this letter should be attached
to the Form 8832.

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

the federal tax consequences of the facts described above under any other provision of
the 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 sending a

copy of this letter to X's authorized representatives.

                                     Sincerely,

                                     Associate Chief Counsel
                                     (Passthroughs & Special Industries)

                                     /s/ Adrienne M. Mikolashek
                               By:
                                     Adrienne M. Mikolashek
                                     Branch Chief, Branch 3
                                     (Office of the Associate Chief Counsel

Enclosure (2)
Copy of this Letter
Copy for 6110 purposes

cc: