LLC gets 120 days to re-file a check-the-box election that was missing required signatures

Plain-English summary

Under the "check-the-box" rules, an LLC with two or more members is treated as a partnership by default but can elect to be taxed as a corporation by filing Form 8832. That form has to be signed by the right people, including any owners during the period the election reaches back to cover. This LLC wanted to switch from partnership to corporation treatment and filed a Form 8832, but the form did not include all of the required signatures, so the election was defective. The taxpayer asked the IRS for late-election relief under the Section 301.9100-3 regulations. The IRS found the taxpayer acted reasonably and in good faith and granted 120 days to file a proper Form 8832 effective as of the intended date. The IRS cautioned that granting more time to file does not itself decide whether the entity is actually eligible to make the election.

Ruling snapshot

• Question: May an LLC get an extension of time to properly file a Form 8832 electing corporate classification after its first election lacked required signatures?
• Outcome: approved (120-day extension)
• Key authorities: Treas. Reg. §§ 301.7701-3(a), (b), (c), 301.9100-1, 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                    Department of the Treasury
                                                             Washington, DC 20224

 Number: 202308008                                           Third Party Communication: None
 Release Date: 2/24/2023                                     Date of Communication: Not Applicable
 Index Numbers: 9100.00-00, 9100.31-00
                                                             Person To Contact:
 --------------------------                                  -------------------, ID No. -----------------
 ------------------------------------------------------      Telephone Number:
 --------------------------                                  --------------------
 -----------------------------------                         Refer Reply To:
  -------------------------------------                      CC:PSI:03
                                                             PLR-112679-22
                                                             Date:
                                                             November 21, 2022




Legend

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

State =           -------------

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

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


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

        This letter responds to a letter dated June 29, 2022, 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 elect to be
classified as a corporation for federal tax purposes under § 301.7701-3.

                                                          FACTS

        According to the information submitted, X was formed as a limited liability
company under the laws of State. Prior to Date 1, X was classified as a partnership for
federal tax purposes. X represents that it intended to elect to change its classification
from a partnership to an association taxable as a corporation for federal tax purposes
effective Date 1. On or about Date 2, X filed a Form 8832, Entity Classification Election,
electing to be classified as an association taxable as a corporation effective Date 1, but
the election did not contain all of the required signatures.
PLR-112679-22                                  2



                                       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
under § 301.7701-2(b)(2)) or a partnership. Elections are necessary only when an
eligible entity does not want to be classified under the default classification or when an
eligible entity chooses to change its classification.

        Section 301.7701-3(b)(1) provides that, except for certain existing entities
described in § 301.7701-3(b)(3), unless an eligible 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.

        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 service center designated on Form 8832.
Section 301.7701-3(c)(1)(iii) provides that an election 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 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 301.7701-3(c)(2)(i) provides, in general, that an election made under
§ 301.7701-3(c)(1)(i) must be signed by (A) each member of the electing entity who is
an owner at the time the election is filed; or (B) any officer, manager, or member of the
electing entity who is authorized (under local law or the entity's organizational
documents) to make the election and who represents to having such authorization
under penalties of perjury.

         Section 301.7701-3(c)(2)(ii) provides that, for purposes of § 301.7701-3(c)(2)(i), if
an election under § 301.7701-3(c)(1)(i) is to be effective for any period prior to the time
that it is filed, each person who was an owner between the date the election is to be
effective and the date the election is filed, and who is not an owner at the time the
election is filed, must also sign the election.

       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)
defines the term "regulatory election" as an election whose due date is prescribed by a
PLR-112679-22                                3


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 an
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 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) 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 the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a
result, we grant X an extension of time of 120 days from the date of this letter to file a
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 1. A copy of this letter
should be attached to the Form 8832.

        Except as specifically set forth above, we express or imply no opinion concerning
the tax consequences of any aspect of any transaction or item discussed or referenced
in this letter. 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.

       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 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-112679-22                                  4


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


                                         Sincerely,

                                      Associate Chief Counsel
                                      (Passthroughs & Special Industries)



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




Enclosure:
      Copy of this letter for § 6110 purposes



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