LLC gets 120 more days to elect corporation treatment after missing the Form 8832 deadline

Plain-English summary

A limited liability company wanted to be treated as a corporation for federal
tax purposes. Under the "check-the-box" rules in Treasury Regulation section
301.7701-3, an eligible entity makes that choice by filing Form 8832, Entity
Classification Election, by a set deadline. This LLC intended to be classified
as a corporation as of a particular date but never timely filed the form. It
asked the IRS for extra time under the section 301.9100 relief rules, which let
the Commissioner grant more time to make a regulatory election when the
taxpayer acted reasonably and in good faith and the government is not harmed.
The IRS agreed and gave the LLC 120 days from the date of the ruling to file
Form 8832 electing corporation treatment effective on the intended date. The
IRS cautioned that granting more time to elect is not itself a ruling that the
entity is actually eligible to make the election.

Ruling snapshot

• Question: Should the LLC get more time to file a Form 8832 election to be treated as a corporation after missing the deadline?
• Outcome: Approved (120-day extension granted)
• Key authorities: Treas. Reg. § 301.7701-3; Treas. Reg. §§ 301.9100-1, 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202330001                                             Third Party Communication: None
 Release Date: 7/28/2023                                       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-100311-23
                                                               Date:
                                                               May 02, 2023




                                                   LEGEND

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

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

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

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


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

This responds to a letter dated December 21, 2022, submitted on behalf of X by X’s
authorized representatives, requesting an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations for X to file an entity classification election
pursuant to § 301.7701-3 of the Procedure and Administration Regulations to be treated
as an association taxable 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 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.

                                          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
PLR-100311-23                                 2

elect its classification for federal tax purposes as provided in § 301.7701-3. 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, 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, in part, that an eligible entity may elect to be
classified other than as provided in § 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 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 can not be more than seventy-five (75) days prior to the date on which the election
is filed and can not be more than twelve (12) months after the date on which the
election 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 (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) granting relief will not prejudice the interests of the government.

                                      CONCLUSION

Based solely on the facts submitted and the 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 make an election
PLR-100311-23                                  3

to be treated as a corporation for federal tax purposes effective 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 8832.

Except for the specific ruling above, we express or imply no opinion concerning the
federal tax consequences of the facts of this case under any other provision of the
Code. In particular, § 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.

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.

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.

Pursuant to a 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)




                                       Caroline E. Hay
                                        Caroline E. Hay
                                        Senior Technician Reviewer, Branch 1
                                        Office of the Associate Chief Counsel
                                        (Passthroughs & Special Industries)


Enclosure:
      Copy for § 6110 purposes


cc: