IRS grants a corporate parent 60 more days to make a late consolidated-return election

Plain-English summary

A corporate parent wanted its affiliated group of corporations to file a
single consolidated federal income tax return, with itself as the common
parent, for a particular tax year. That choice, the consolidated-return
election under Treas. Reg. § 1.1502-75(a)(1), has to be made by timely filing
the consolidated return. The group missed the deadline. It asked the IRS for
"9100 relief," a discretionary extension under Treas. Reg. § 301.9100-3 to
make a late regulatory election. The IRS granted it. The parent showed it had
relied on a qualified tax professional who failed to make or advise the
election, it came forward before the IRS caught the lapse, the statute of
limitations was still open, and granting relief would not prejudice the
government. The parent now has 60 days from the ruling to file the
consolidated return (attaching a Form 1122 for each subsidiary). The relief is
conditioned on the group actually qualifying to file consolidated and on its
combined tax not being lower than if the election had been timely; the IRS
expressed no view on those points.

Ruling snapshot

• Question: Should the IRS grant an extension of time under Treas. Reg. § 301.9100-3 for a corporate parent to make a late election to file a consolidated return?
• Outcome: Approved (60-day extension granted, subject to conditions)
• Key authorities: Treas. Reg. §§ 301.9100-1 through 301.9100-3, 1.1502-75(a)(1); IRC §§ 1502, 6501(a), 6662, 6110(k)(3)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202317019 Third Party Communication: None
Release Date: 4/28/2023 Date of Communication: Not Applicable
Index Number: 1502.00-00, 1502.75-00,
9100.00-00, 9100.20-00 Person To Contact:
-------------------------,
---------------------- ID No. -----------------
----------------------------- Telephone Number:
---------------------------------------- --------------------
------------------------------- Refer Reply To:
CC:CORP:BO2
PLR-120751-22
Date:
February 01, 2023

Legend

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

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

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

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

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

This letter responds to a letter dated October 21, 2022, submitted on behalf of Parent,
requesting an extension of time under §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 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) 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 of the Code.

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 Parent reasonably relied on a qualified tax
professional who failed to make, or advise Parent to make, a valid election and 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) and (v).

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 60 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-120751-22) 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 return or 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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