9100 relief to file a late Form 8832 electing to be taxed as a corporation

Plain-English summary

A limited company that is an "eligible entity" under the check-the-box rules wanted to be classified as an association taxable as a corporation for federal tax purposes, but through inadvertence it never timely filed the required Form 8832 (Entity Classification Election). It asked the IRS for "9100 relief," a discretionary extension under Treas. Reg. § 301.9100-3 to make this regulatory election, and the IRS granted it. Relief is available when the taxpayer acted reasonably and in good faith and granting it will not prejudice the government. The IRS gave the entity 120 days from the date of the letter to file Form 8832 with its original intended effective date, contingent on the entity and its owners filing all required original or amended returns for open years consistent with the relief. The ruling stresses two limits. First, granting an extension is not a determination that the entity is otherwise eligible to make the election. Second, if the election would otherwise change any of the § 965 (transition tax) amounts of the entity's U.S. shareholders, it is disregarded for those § 965 purposes under Treas. Reg. § 1.965-4(c)(2), which blocks using a late entity-classification election to reduce the one-time repatriation tax. This matters because check-the-box classification drives how an entity and its owners are taxed, and 9100 relief can rescue an inadvertently missed election.

Ruling snapshot

• Question: Should the entity get an extension of time under § 301.9100-3 to file a late Form 8832 electing to be treated as an association taxable as a corporation?
• Outcome: Approved (9100-3 relief granted; 120 days to file Form 8832, with the § 1.965-4(c)(2) anti-abuse caveat)
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3, 1.965-4(c)(2)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202152014
Third Party Communication: None
Release Date: 12/30/2021
Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
9100.31-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:PSI:B3
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PLR-110335-21
Date:
September 21, 2021

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

This letter responds to a letter dated May 6, 2021, submitted on behalf of X by its authorized representatives, 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 taxable as a corporation for federal tax purposes.

Facts

Based on the material submitted, X is an entity formed as a limited company under the laws of State on Date. X represents it was an entity eligible to elect to be classified as an association taxable as a corporation for federal tax purposes. However, due to inadvertence, a Form 8832, Entity Classification Election, to treat X as an association taxable as a corporation, effective Date, was not timely filed.

Law and 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)(1) provides that except as provided in § 301.7701-3(b)(3), 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.
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Section 301.7701-3(c)(1)(i) provides, in part, 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, Entity Classification Election, with the service center designated on Form 8832.

Section 301.7701-3(c)(1)(iii) provides that an election made under § 301.7701- 3(c)(1)(i) will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified on the election form. The effective date specified on Form 8832 can not be more than 75 days prior to the date on which the election is filed and can not be more than 12 months after the date on which the election is filed. If an election specifies an effective date more than 75 days prior to the date on which the election is filed, it will be effective 75 days prior to the date it was filed.

Section 301.9100-1(c) provides that the Commissioner in exercising the Commissioner’s discretion may grant a reasonable extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a regulatory election, or a statutory election (but not 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.

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 guidelines for granting extensions of time for making elections that do not meet the requirements of § 301.9100-2. Section 301.9100- 3(a) provides that requests for relief subject to § 301.9100-3 will be granted when the taxpayer provides the 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 facts submitted and the representations made, we conclude that X has satisfied the requirements of § 301.9100-3. As a result, we grant X an extension of time of one hundred twenty (120) days from the date of this letter to file Form 8832 with the appropriate service center to elect to be classified as an association taxable as a corporation for federal tax purposes, effective Date. A copy of this letter should be attached to the Form 8832.

This ruling is contingent on X and its owners filing within 120 days of the date of this letter all required original or amended information and tax returns for all open years
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consistent with the requested relief. A copy of this letter should be attached to any such returns.

Except as specifically set forth above, we express or imply no opinion concerning the federal tax consequences of the facts of this case 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.

If applicable, this election to be classified as an association taxable as a corporation is disregarded for purposes of determining the amounts of all § 965 elements of all United States shareholders of X if the election otherwise would change the amount of any § 965 element of any such United States shareholder. See § 1.965- 4(c)(2).

We are directing the ruling only to the taxpayer who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

Pursuant to a power of attorney on file with this office, we are sending a copy of this letter to X’s authorized representatives.
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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.

Sincerely,

Associate Chief Counsel
(Passthroughs & Special Industries)

By: _____
Richard T. Probst
Senior Technician Reviewer, Branch 3
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)

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

cc: