IRS grants a 75-day extension to make a late consolidated-return election

Plain-English summary

A corporate parent asked the IRS for extra time to make an election that lets an affiliated group of corporations file a single consolidated federal income tax return, with the parent as the common parent, for a particular tax year. That election is made by timely filing the consolidated return under Treas. Reg. § 1.1502-75(a)(1), but the group missed the deadline. Under the "9100 relief" rules (Treas. Reg. § 301.9100-3), the IRS can grant more time to make a regulatory election if the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The parent represented that it reasonably relied on a qualified tax professional who failed to make or advise the election, that it caught the problem before the IRS did, and that the statute of limitations remains open. The IRS granted the extension, giving the parent 75 days from the date of the letter to file the consolidated return (attaching a Form 1122 for each subsidiary). The relief is conditioned on the group actually qualifying to file a consolidated return and on the group's aggregate tax liability being no lower than if the election had been timely; the IRS expressed no opinion on whether the group substantively qualifies or on the late filing's other tax consequences.

Ruling snapshot

• Question: Should the parent get a discretionary extension of time under § 301.9100-3 to make a late election to file a consolidated return?
• Outcome: Approved (75-day extension granted)
• Key authorities: Treas. Reg. §§ 301.9100-1, 301.9100-3; Treas. Reg. § 1.1502-75(a)(1); IRC § 6501(a); IRC § 6662

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 202333002                                             Third Party Communication: None
Release Date: 8/18/2023                                       Date of Communication: Not Applicable
Index Number: 9100.20-00
                                                              Person To Contact:
------------------------                                      --------------------, ID No. -----------------
---------------------------------------                       Telephone Number:
----------------------------------------------------------    --------------------
----------------------------------                            Refer Reply To:
                                                              CC:CORP:BO2
                                                              PLR-105858-23
                                                              Date:
                                                              May 23, 2023




Legend


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

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

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

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


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

This letter responds to a letter dated March 14, 2023, 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 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 (the "Parent Group"). 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.

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 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-105858-23) of, this ruling letter.

The above extension of time is conditioned on the 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, a copy of this letter is
being sent to your authorized representative.

                                              Sincerely,


                                              Thomas I. Russell
                                              Thomas I. Russell
                                              Chief, Branch 1
                                              Office of Associate Chief Counsel (Corporate)

cc: ----------------------------
    ----------------------------------------------------
    -------------------------

     -------------------------------------