120-day extension for a foreign entity to file a late Form 8832 electing partnership status

Plain-English summary

A foreign business entity wanted to be treated as a partnership for U.S. federal
tax purposes. Under the "check-the-box" rules, an eligible entity makes that choice
by filing Form 8832, but this entity missed the filing deadline. Because the
deadline comes from a regulation, the IRS can grant a late-election extension under
Treasury Regulation § 301.9100-3 when the taxpayer acted reasonably and in good
faith and relief will not prejudice the government. The IRS granted 120 days to file
Form 8832 electing partnership classification as of the requested effective date.
The relief is conditioned on the entity and its indirect U.S. owners filing all
consistent tax and information returns (such as Forms 8865) within the same 120
days, and the ruling notes a special § 965 wrinkle if the election would change a
U.S. shareholder's transition-tax amounts.

Ruling snapshot

• Question: May a foreign eligible entity get a § 301.9100-3 extension to file a late Form 8832 electing partnership classification?
• Outcome: Approved (120-day extension)
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-3; IRC § 965

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202214003 Third Party Communication: None
Release Date: 4/8/2022 Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
-----------------, ID No. -----------------
------------------------------------------------------- Telephone Number:
-------------------------------- --------------------
----------------------------- Refer Reply To:
----------------------------- CC:PSI:03
------------------------------------- PLR-114899-21
Date:

                                                             January 14, 2022

Legend:

X: = -------------------------------------------------------
-----------------------

Country: = --------------------

Date: = ------------------------------------

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

   This letter responds to a letter dated July 2, 2021, and subsequent

correspondence submitted on behalf of X, requesting an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations for X to file an election
under § 301.7701-3 to be classified as a partnership for federal tax purposes.

                                                 FACTS

   The information submitted states that X was formed under the laws of Country on

Date. X represents that it is a foreign entity eligible to elect to be classified as a
partnership effective Date. However, X failed to timely file Form 8832, Entity
Classification Election, electing to classify X as a partnership effective Date.

                                       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 (and thus a corporation
PLR-114899-21 2

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)(i) provides that, 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, in part, 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 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 effective 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 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 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) 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 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
PLR-114899-21 3

file a Form 8832 with the appropriate service center to elect to be classified as a
partnership effective Date. A copy of this letter should be attached to the Form 8832.

   This ruling is contingent on X and any of its indirect U.S. owners filing, within 120

days from the date of this letter, to the extent necessary or appropriate, all required
federal income tax 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.

   If applicable, X's election to be classified as a partnership effective Date is

disregarded for purposes of determining the amounts of all section 965 elements of all
United States shareholders of X if the election otherwise would change the amount of
any section 965 element of any such United States shareholder. See § 1.965-4(c)(2) of
the Income Tax Regulations.

   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.

   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.
PLR-114899-21 4

  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 a power of attorney on file with this office, we are sending a

copy of this letter to your authorized representatives.

                                  Sincerely,

                                  Associate Chief Counsel
                                  (Passthroughs & Special Industries)



                             By: __________________________________
                                 Mary Beth Carchia
                                 Senior Technician Reviewer, Branch 3
                                 Office of Associate Chief Counsel
                                 (Passthroughs & Special Industries)

Enclosure:
Copy of this letter for § 6110 purposes

cc: