LLC received 120 days to file a late corporate classification election

Plain-English summary

A single-owner limited liability company intended to be classified as an association taxable as a corporation from its formation date. Its default federal classification was a disregarded entity, but it inadvertently failed to file Form 8832 on time. The company represented that it acted reasonably and in good faith, that relief would not prejudice the government's interests, and that it was not using hindsight. The IRS granted 120 days to file Form 8832 with the requested effective date. The ruling addressed only the late election and did not decide other tax consequences.

Ruling snapshot

• Question: Could the LLC receive extra time to elect corporate classification effective from its formation date?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                Department of the Treasury
                                                         Washington, DC 20224

 Number: 202324002                                       Third Party Communication: None
 Release Date: 6/16/2023                                 Date of Communication: Not Applicable
 Index Numbers: 9100.31-00, 7701.00-00
                                                         Person To Contact:
 ------------------------------                          -------------------, ID No. -----------------
 -------------------------------------                   Telephone Number:
 ------------------------                                --------------------
 -------------------------------                         Refer Reply To:
 ---------------------------                             CC:PSI:03

                                                         PLR-117034-22
                                                         Date:
                                                         March 08, 2023

Legend:

X:                 -------------------------------
-----------------------------------------

State:            -------------

Date 1:           ------------------------


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

       This letter responds to a letter dated September 7, 2022, submitted on behalf of
X, requesting that the Service grant X an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations to elect to be treated as an association
taxable as a corporation for federal tax purposes.

                                                 FACTS

         The information submitted states that X was initially formed in State as a limited
liability company on Date 1. X’s default classification for federal tax purposes was as a
disregarded entity. However, X intended to elect to be classified as an association
taxable as a corporation effective Date 1.

       X inadvertently failed to timely file Form 8832, Entity Classification Election. X is
requesting an extension of time under § 301.9100-3 to make a late entity classification
election to be treated as an association taxable as a corporation for federal tax
purposes effective Date 1.

        X represents that it has acted reasonably and in good faith, that granting relief
will not prejudice the interests of the government, and that it is not using hindsight in
making the election.
PLR-117034-22                                  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 . Elections are necessary only when an
eligible entity chooses to be classified initially as other than the default classification or
when an eligible entity chooses to change its classification.

      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 an eligible entity may elect to be
classified other than as provided under § 301.7701-3(b) by filing Form 8832 with the
appropriate service center. Section 301.7701-3(c)(1)(iii) provides that this election will
be effective on the date specified by the entity on Form 8832 or on the date filed if no
such date is specified. The date specified on Form 8832 cannot be more than 75 days
prior to the date on which the election is filed.

       Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but not more than 6 months except in the
case of a taxpayer who is abroad), under all subtitles of the Code except subtitles E, G,
H, and I. Section 301.9100-1(b) provides that the term “regulatory election” includes an
election whose due date is prescribed by a regulation published in the Federal Register.

        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
PLR-117034-22                                3


corporation for federal tax purposes, effective Date 1. A copy of this letter should be
attached to the Form 8832.

      The ruling contained in this letter are 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 request for rulings, it is subject to verification on
examination.

       Except as expressly provided herein, no opinion is expressed or implied
concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter.

       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)



                                 By: __________________________________
                                     Richard T. Probst
                                     Senior Technician Reviewer, Branch 3
                                     Office of Associate Chief Counsel
                                     (Passthroughs & Special Industries)



Enclosure:
      Copy of this letter


cc: