Late "check-the-box" election granted so a foreign limited company can be taxed as a partnership

Plain-English summary

A limited company formed under foreign law wanted to be treated as a partnership
for U.S. tax purposes, which requires filing Form 8832 (the "check-the-box"
election) by a deadline. The company missed that deadline. It asked the IRS for
an extension under the Section 301.9100-3 relief rules, which allow a late
election when the taxpayer acted reasonably and in good faith and relief will not
prejudice the government. The IRS granted a 120-day extension to file Form 8832
effective as of the intended date, so long as the company and its owners also
file any required returns (including Forms 8865 for foreign partnerships)
consistent with partnership treatment. The relief only fixes the late timing; it
does not decide the entity was otherwise eligible, and it waives no penalties.

Ruling snapshot

• Question: Should the foreign limited company get an extension under
  Section 301.9100-3 to file a late Form 8832 electing partnership treatment?
• Outcome: Approved (120-day extension, contingent on filing consistent
  returns)
• 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

 Number: 202210006                                              Third Party Communication: None
 Release Date: 3/11/2022                                        Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.31-00
                                                                Person To Contact:
 ---------------------                                          ----------------------, ID No. -----------------
 ------------------------------------------------------------   Telephone Number:
 -----                                                          --------------------
 ----------------------------------------------                 Refer Reply To:
 --------------------------------------                         CC:PSI:B01
 ---------------------------                                    PLR-113083-21
 -------------                                                  Date:
 ------------------------------------------------               December 14, 2021

 ----------------------------------------


                                                   LEGEND

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

 Country = ------------------------------------

 Date 1       = ----------------------


Dear --------:

This responds to a letter dated June 16, 2021, 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 to elect to be
treated as a partnership under § 301.7701-3.

                                                     FACTS

The information submitted states that X was formed as a limited company under the
laws of Country. X represents that X is a foreign entity eligible to be treated as a
partnership. However, X inadvertently failed to timely file a Form 8832, Entity
Classification Election, electing to treat X as a partnership effective Date 1.

                                            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 may elect to be classified as either an association (and
thus a corporation under § 301.7701-2(b)(2)) or as a partnership, and an eligible entity
PLR-113083-21                                 2



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)(i) provides that except as provided in § 301.7701-(3)(b)(3),
unless the entity elects otherwise, a foreign eligible entity is (A) a partnership if it has
two or more members and at least one member does not have limited liability; (B) an
association if all members have limited liability; or (C) disregarded as an entity separate
from its owner if it has a single owner that does not have limited liability.

Section 301.7701-3(b)(2)(ii) provides that for purposes of § 301.7701-3(b)(2)(i), a
member of a foreign eligible entity has limited liability if the member has no personal
liability for the debts of or claims against the entity by reason of being a member.

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 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 under the rules set forth in §§ 301.9100-2 and 301.9100-3 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) defines the term "regulatory
election" as an election whose due date is prescribed by a regulation published in the
Federal Register or a revenue ruling, revenue procedure, notice, or announcement
published in the Internal Revenue Bulletin.

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 regulator 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 (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.
PLR-113083-21                                 3


                                      CONCLUSION

Based solely on the information submitted and the representations made, we conclude
that the requirements of § 301.9100-1 and 301.9100-3 have been satisfied. 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 and elect to be treated as a partnership
effective Date 1. A copy of this letter should be attached to the Form 8832.

This ruling is contingent on Company and its owners filing, within 120 days from the
date of this letter, to the extent necessary or appropriate, all required federal income tax
returns and information returns (including amended returns) consistent with the
requested relief granted in this letter. These returns include, but are not limited to,
Forms 8865, Return of U.S. Persons with Respect to Certain Foreign Partnerships,
such that these forms reflect the consequences of the relief granted in this letter. A
copy of this letter should be attached to any such returns.

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 Code.
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.

We express no opinion concerning the assessment of any interest, additions to tax,
additional amounts, or penalties for failure to file a timely tax or information return with
respect to any taxable year that may be affected by this ruling. For example, we express
no opinion as to whether a taxpayer is entitled to relief from any penalty on the basis
that the taxpayer had reasonable cause for failure to file timely any income tax or
information returns.

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 to the taxpayer requesting it. Section 6110(k)(3) provides that it
may not be used or cited as precedent.
PLR-113083-21                                  4


Pursuant to a power of attorney on file with this office, a copy of this letter is being sent
to X's authorized representative.


                                        Sincerely,



                                    By: _/s/__________________________
                                        Caroline E. Hay
                                        Senior Counsel, Branch 1
                                        Office of the Associate Chief Counsel
                                        (Passthroughs & Special Industries)


Enclosure (1):
      Copy of this letter for § 6110 purposes



cc: