IRS grants extra time for a corporate group to make a late election to file a consolidated return

Plain-English summary

An affiliated group of corporations can elect to file a single consolidated federal income tax return, but the election must be made by filing that consolidated return by the due date (including extensions). Here the parent, which is treated as a U.S. corporation under the anti-inversion rules of IRC § 7874, was the common parent of an affiliated group but did not timely file the consolidated return that would have made the election for the relevant year. The group sought "9100 relief," a discretionary extension to make the late election under Treasury Regulation § 301.9100-3. The IRS found the group acted reasonably and in good faith, requested relief before the IRS discovered the lapse, and would not prejudice the government, and granted 75 days to file the consolidated return (with a Form 1122 for each subsidiary). The relief is conditioned on the group actually qualifying to file consolidated, the statute of limitations remaining open, and no reduction in aggregate tax liability; the IRS expressed no opinion on the § 7874 issues.

Ruling snapshot

• Question: May the affiliated group get an extension of time to make a late election to file a consolidated return under § 1.1502-75(a)(1)?
• Outcome: Approved (75-day extension, subject to eligibility and no-lower-tax conditions)
• Key authorities: Treas. Reg. §§ 1.1502-75(a)(1), 301.9100-1 through 301.9100-3; IRC § 7874

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202219013 Third Party Communication: None
Release Date: 5/13/2022 Date of Communication: Not Applicable
Index Number: 9100.00-00, 9100.20-00
Person To Contact:
---------------------------- ----------------------, ID No. -----------------
--------------------------------------------------- Telephone Number:
---------------------------------------------------- --------------------
------------------------------- Refer Reply To:
CC:CORP:B05
PLR-121866-21
Date:
February 15, 2022

Legend

Parent = ---------------------------------------------------
------------------------------------------------------------------------

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

Year = -------

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

Company Official = -----------------------
------------------------------------------------------------------------

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

Tax Professional = ----------------------------
-------------------------

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

This letter responds to a letter dated September 28, 2021, submitted on behalf of
Parent, requesting an extension of time under §§301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to file an election. Parent is requesting an
extension of time for Parent and the members of its affiliated group (the "Parent Group")
to make an election under §1.1502-75(a)(1) of the Income Tax Regulations to file a
consolidated federal income tax return, with Parent as the common parent, for the
taxable year ending on Date 1 (the "Election"). The material information submitted for
consideration is summarized below.
PLR-121866-21 2

Parent has represented that, as a result of a transaction occurring during Year, Parent
is treated as a U.S. corporation for federal income tax purposes pursuant to section
7874 of the Internal Revenue Code (the "Code"), and that Parent was the common
parent of an affiliated group of corporations for the taxable year ending on Date 1. An
election for the Parent Group to file a consolidated income tax return, with Parent as the
common parent, for the taxable year ending on Date 1 was due on the last day
prescribed by law (including extensions of time) for the filing of Parent's return. For
various reasons, a valid Election (i.e., the timely filing of the consolidated return) was
not filed by the due date of Parent's return. Subsequently, a request was submitted
under §301.9100-3 for an extension of time to file the Election.

The period of limitations on assessment under section 6501(a) has not expired for the
taxable year ending on Date 1 or any subsequent taxable year. Parent has represented
that it is not seeking to alter a return position for which an accuracy-related penalty has
been or could be imposed under section 6662 of the Code at the time of the request for
relief. Parent has represented that, if not for the various reasons a valid Election was
not filed by the due date of Parent's return for the taxable year ending on Date 1, Parent
and the members of its affiliated group would have timely made the Election regardless
of the enactment of the Tax Cuts and Jobs Act (TCJA) and the issuance of regulations
relating to the TCJA.

Under §301.9100-1(c), the Commissioner has discretion to grant a reasonable
extension of time to make a regulatory election, or a statutory election (but no more than
six months except in the case of a taxpayer who is abroad), under all subtitles of the
Code except subtitles E, G, H, and I.

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 a regulatory election.
Section 301.9100-1(a). Section 301.9100-2 provides automatic extensions of time for
making certain elections. Requests for relief under §301.9100-3 will be granted when
the taxpayer provides evidence to establish to the satisfaction of the Commissioner that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the government. Section 301.9100-3(a).

The time for filing the Election is fixed by the regulations (i.e., §1.1502-75(a)(1)).
Therefore, the Commissioner has discretionary authority under §301.9100-3 to grant an
extension of time for Parent to file the Election, provided Parent shows it acted
reasonably and in good faith, the requirements of §§301.9100-1 and 301.9100-3 are
satisfied, and granting relief will not prejudice the interests of the government.

Information, affidavits, and representations submitted by Parent, Company Official, and
Tax Professional explain the circumstances that resulted in the failure to timely file the
Election. The information establishes that the request for relief was filed before the
failure to make the Election was discovered by the Internal Revenue Service. See
PLR-121866-21 3

§301.9100-3(b)(1)(i).

Based on the facts and information submitted, including the representations made, we
conclude that Parent has shown it acted reasonably and in good faith, the requirements
of §§301.9100-1 and 301.9100-3 are satisfied, and granting relief will not prejudice the
interests of the government. Accordingly, provided that Parent Group qualifies
substantively to file a consolidated return for the applicable tax year and that the statute
of limitations is still open for the taxable year ending on Date 1 and all subsequent
years, we grant an extension of time under §301.9100-3, until 75 days from the date on
this letter, for Parent to file the Election (by filing a consolidated return, with Parent as
the common parent, and attaching a Form 1122 for each subsidiary which was a
member of the Parent Group for the taxable year ending on Date 1). Parent must
attach a copy of this ruling letter to such return, or if the return is filed electronically, a
statement must be attached to the return that provides the date on, and the control
number (PLR-121866-21) of, this letter ruling.

The above extension of time is conditioned on Parent Group's tax liability (if any) being
not lower, in the aggregate, for all years to which the Election applies, than it would
have been if the Election had been timely made (taking into account the time value of
money). No opinion is expressed as to the Parent Group's tax liability for the years
involved. A determination thereof will be made by the applicable Director's office upon
audit of the federal income tax returns involved.

We express no opinion with respect to whether the Parent Group qualifies substantively
to file a consolidated return. In addition, no opinion is expressed or implied regarding
the application of section 7874, including section 7874(b), with respect to Parent.
Further, we express no opinion as to the tax effects or consequences of filing the
Election late under the provisions of any other section of the Code or regulations, or as
to the tax treatment of any conditions existing at the time of, or effects resulting from,
filing the Election late that are not specifically set forth in the above ruling.

For the purposes of granting relief under §301.9100-3, we relied on certain statements
and representations made by Parent, Company Official, and Tax Professional.
However, the Director should verify all essential facts. In addition, notwithstanding that
an extension is granted under §301.9100-3 to file the Election, penalties and interest
that would otherwise be applicable, if any, continue to apply.

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.
PLR-121866-21 4

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representatives.

                                               Sincerely,


                                               Thomas I. Russell_________
                                               Thomas I. Russell
                                               Chief, Branch 1
                                               Office of Associate Chief Counsel (Corporate)

cc: ---------------------
-------------------
-----------------------------------------
----------------------------------

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

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