Extension of time for a corporate group to make a late election to file a consolidated return

Plain-English summary

A group of affiliated corporations can elect to file a single
consolidated federal income tax return, with a common parent, instead of
separate returns. The election is made by timely filing that
consolidated return. Here, a corporation became the common parent of a
new affiliated group but, for various reasons, did not timely file the
consolidated return that would have made the election for the first tax
year. The parent asked the IRS for more time under the section 9100
relief rules. Because the filing deadline is set by regulation, the
parent requested relief before the IRS caught the failure, the statute of
limitations was still open, and the parent represented it acted in good
faith, the IRS granted a 75-day extension to file the consolidated
return (attaching a Form 1122 for each subsidiary). The relief is
conditioned on the group not ending up with lower total tax than a timely
election would have produced, and the IRS did not decide whether the
group actually qualifies to file consolidated. This lets the group lock
in consolidated-return treatment despite missing the original deadline.

Ruling snapshot

• Question: May the parent receive an extension of time under Treas.
  Reg. § 301.9100-3 to make a late election under Treas. Reg.
  § 1.1502-75(a)(1) to file a consolidated return for its group?
• Outcome: Approved (75-day extension to file the consolidated return)
• Key authorities: Treas. Reg. §§ 301.9100-1, 301.9100-3,
  1.1502-75(a)(1); IRC §§ 6501(a), 6662

Full text (IRS public release)

 Internal Revenue Service                                        Department of the Treasury
                                                                 Washington, DC 20224

 Number: 202237003                                               Third Party Communication: None
 Release Date: 9/16/2022                                         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:04
                                                                 PLR-104131-22
                                                                 Date:
                                                                 June 23, 2022

Legend

Parent                    =        [redacted]

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

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

Company Official          =        [redacted]

Tax Professional          =        [redacted]

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

This letter responds to a letter dated December 29, 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.

Parent has represented that it became the common parent of an affiliated group of
corporations effective on Date 2. 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) of the Internal Revenue
Code (Code) has not expired for the taxable year ending on Date 1 or any subsequent
taxable year. Parent has represented that it is not attempting to alter a return position
for which an accuracy-related penalty has been or could be imposed under section
6662 (taking into account any qualified amended return filed within the meaning of
§1.6664-2(c)(3)).

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
§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, an extension of time is granted 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-104131-22) of, this ruling letter.

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, 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.

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

                                         Sincerely,


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

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