Late check-the-box election to be taxed as a corporation allowed under 9100 relief

Plain-English summary

A limited liability company wanted to be classified as a corporation for federal tax purposes (an "entity classification," or "check-the-box," election) effective on a chosen date, but it missed the deadline to file Form 8832. By default, an LLC is treated as a partnership (if it has two or more owners) or as a disregarded entity (if it has a single owner) unless it elects otherwise. The company asked the IRS for more time under the "9100 relief" rules (Treasury Regulation 301.9100-3), which let the IRS extend the time to make a regulatory election when the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The IRS found the standard met and granted the company 120 days from the date of the letter to file Form 8832 electing to be treated as a corporation, effective the originally intended date. The relief is contingent on the company and its owner filing all required (original or amended) returns for open years consistent with corporate treatment within the same 120 days.

Ruling snapshot

• Question: Should the IRS grant an extension of time for an LLC to file a late Form 8832 electing to be classified as a corporation?
• Outcome: Approved (9100 relief granted; 120 days to file Form 8832)
• Key authorities: Treas. Reg. § 301.9100-1 and § 301.9100-3; Treas. Reg. § 301.7701-3

Full text (IRS public release)

Internal Revenue Service                                     Department of the Treasury
                                                             Washington, DC 20224

Number: 202319007                                            Third Party Communication: None
Release Date: 5/12/2023                                      Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
              9100.31-00                                     Person To Contact:
                                                             -------------------, ID No. -----------------
----------------------------------------------------------   Telephone Number:
----------------                                             --------------------
-----------------------                                      Refer Reply To:
-------------------------                                    CC:PSI:01
---------------------------------------------------------    PLR-115803-22
                                                             Date:
                                                             February 14, 2023




LEGEND

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

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

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

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



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

This responds to a letter dated August 15, 2022, submitted on behalf of X, requesting
an extension of time under § 301.9100-3 of the Procedure and Administration
Regulations for X to file an entity classification election to be classified as a corporation
for federal tax purposes.

                                                     FACTS

The information submitted states that X is a limited liability company formed under the
laws of State on Date 1. X is not classified as a corporation under § 301.7701-2(b)(1),
(3), (4), (5), (6), (7), or (8). X intended to be classified as a corporation, effective on
Date 2. However, X did not timely file Form 8832, Entity Classification Election, electing
to be treated as a corporation.

X represents that it acted reasonably and in good faith, and that the interests of the
government will not be prejudiced by granting relief. X further represents that no
hindsight is involved in seeking the relief requested.

                                   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 or a partnership, and 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 the 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 to elect to be classified other than as provided
in § 301.7701-3(b), an eligible entity must file Form 8832, Entity Classification Election,
with the designated service center. Under § 301.7701-3(c)(1)(iii), this election can be
effective up to seventy-five (75) days prior to the date the form is filed or up to twelve
(12) months after the date the form is filed.

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 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
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 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.

Under § 301.9100-3, a request for relief will be granted when the taxpayer provides
evidence to establish to the satisfaction of the Commissioner that (1) the taxpayer acted
reasonably and in good faith, and (2) granting 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 § 301.9100-3 have been satisfied. As a result, X is granted an
extension of time of 120 days from the date of this letter to make an election to be
treated as a corporation for federal tax purposes effective beginning Date 2. X must
make the election by filing a properly executed Form 8832 with the appropriate service
center. A copy of this letter should be attached to the form.

This ruling is contingent on X and its owner filing within 120 days of the date of this
letter all required original or amended information and tax returns for all open years
consistent with the requested relief. A copy of this letter should be attached to any such
returns.

The ruling contained in this letter is based upon information and representations
submitted by the taxpayer and is accompanied by a penalty of perjury statement
executed by the 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(s) requesting it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent.

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent
to X's authorized representative.

                                        Sincerely,

                                        Associate Chief Counsel
                                        (Passthroughs & Special Industries)




                                    By: Joy C. Spies
                                        Joy C. Spies
                                        Senior Technician Reviewer, Branch 1
                                        (Passthroughs & Special Industries)




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