Corporate parent gets 75 more days to elect to file a consolidated return after its tax pro missed the deadline

Plain-English summary

A parent corporation heading an affiliated group of companies wanted the group
to file a single consolidated federal income tax return, with the parent as the
common parent, for a particular year. That choice is made by an election under
Treasury Regulation section 1.1502-75(a)(1), which must be made by the due date
of the parent's return. The group missed the deadline: no valid election (that
is, no timely consolidated return) was filed. The parent asked the IRS for more
time under the section 301.9100 relief rules, showing it had reasonably relied
on a qualified tax professional who failed to make or advise the election, and
that it asked for relief before the IRS caught the lapse. The IRS granted 75
days from the date of the ruling to file the consolidated return (with a Form
1122 for each subsidiary). The relief is conditioned on the group actually
qualifying to file consolidated, on the assessment statute still being open,
and on the election not lowering the group's aggregate tax; the IRS expressed
no opinion on those points, which are left to audit.

Ruling snapshot

• Question: Should the corporate group get more time to make the section 1.1502-75(a)(1) election to file a consolidated return after missing the deadline?
• Outcome: Approved (75-day extension granted, subject to conditions)
• Key authorities: Treas. Reg. § 1.1502-75(a)(1); Treas. Reg. §§ 301.9100-1, 301.9100-3; IRC § 6501

Full text (IRS public release)

 Internal Revenue Service                                        Department of the Treasury
                                                                 Washington, DC 20224

 Number: 202330003                                               Third Party Communication: None
 Release Date: 7/28/2023                                         Date of Communication: Not Applicable
 Index Number: 9100.20-00
                                                                 Person To Contact:
 -----------------------------                                   -------------------, ID No. -----------------
 --------------------------                                      Telephone Number:
 ----------------------------                                    --------------------
 -------------------------                                       Refer Reply To:
                                                                 CC:CORP:B05
                                                                 PLR-104224-23
                                                                 Date:
                                                                 May 02, 2023




Legend

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

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

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

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


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

This letter responds to a letter dated February 15, 2023, submitted on behalf of Parent,
requesting an extension of time under §301.9100-3 of the Procedure and Administration
Regulations to make 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 Date 1 (the
“Election”). The material information submitted for consideration is summarized below.

Parent was a domestic corporation that 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
PLR-104224-23                                   2

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 taken for which an accuracy-related penalty has been or could be
imposed under section 6662.

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 the 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 75 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 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-
104224-23) of, this ruling letter.
PLR-104224-23                                  3


The above extension of time is conditioned on the Parent Group’s tax liability (if any) not
being 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 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 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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