Extra time granted to file a late check-the-box election to be taxed as a corporation

Plain-English summary

A business started as a state-law corporation, then converted to a single-owner LLC. After the conversion, its default federal tax status was "disregarded" (treated as part of its owner), but the owner wanted it taxed as a corporation instead. To get that treatment, the entity needed to file a Form 8832 check-the-box election, and it missed the deadline. The taxpayer asked for relief under Treasury Regulation § 301.9100-3. The IRS found the taxpayer acted reasonably and in good faith and that relief would not harm the government, so it gave the entity 120 days to file the Form 8832 electing to be taxed as an association (a corporation) effective the conversion date. Relief is contingent on the entity filing consistent returns for all open years. This matters because the default classification rules can lock a business into an unintended tax status; 9100 relief lets an eligible entity still pick the treatment it meant to choose.

Ruling snapshot

• Question: Should the entity get an extension of time under § 301.9100-3 to file a late Form 8832 electing to be taxed as an association (corporation)?
• Outcome: approved (120-day extension granted, contingent on consistent returns)
• Key authorities: Treas. Reg. § 301.9100-3; Treas. Reg. § 301.7701-3

Full text (IRS public release)

 Internal Revenue Service                                        Department of the Treasury
                                                                 Washington, DC 20224

 Number: 202310006                                               Third Party Communication: None
 Release Date: 3/10/2023                                         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:B03
                                                                 PLR-113661-22
                                                                 Date:
                                                                 December 14, 2022


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

Legend:

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

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

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

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


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

        This letter responds to your request dated July 15, 2022, submitted on behalf of
X, by its authorized representatives, 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 an association taxable as a corporation for federal tax
purposes.

                                                     FACTS

       Based on the information submitted, X was formed under the laws of State as a
corporation on Date 1. On Date 2, X converted to a limited liability company under
State law. X represented that after the conversion, X’s classification for federal tax
purposes was disregarded as an entity separate from its owner, but that X intended to
be classified as an association taxable as a corporation for federal tax purposes.
However, X failed to timely to file a Form 8832, Entity Classification Election, electing to
be classified as an association taxable as a corporation effective Date 2.
PLR-113661-22                                  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 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)(1) provides that unless an 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 that an eligible entity may elect to be
classified other than as provided under § 301.7701-3(b) by filing Form 8832 with the
service center designated on Form 8832.

        Section 301.7701-3(c)(1)(iii) provides that this election made 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 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.

       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.

        Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3
will be granted when the taxpayer provides the 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 representations made, we conclude that
X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. 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 to elect to be treated as an association taxable as a
corporation for federal tax purposes effective Date 2. A copy of this letter should be
attached to the Form 8832.
PLR-113661-22                                  3



       This ruling is contingent on X filing, within 120 days of this letter, all required
returns for all open years consistent with the requested relief. A copy of this letter
should be attached to any such returns.

       Except as expressly provided herein, we express or imply no opinion concerning
the tax consequences of the facts of this case 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.

       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)
provides that it may not be used or cited as precedent.

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


                                        Sincerely,

                                        Associate Chief Counsel
                                        (Passthroughs & Special Industries)


                                               /s/ Margaret Burow
                                   By: __________________________________
                                       Margaret Burow
                                       Senior Counsel, Branch 3
                                       Office of Associate Chief Counsel
                                       (Passthroughs & Special Industries)


Enclosure
      Copy for § 6110 purposes

cc: