Extension granted for late entity classification election

Plain-English summary

An eligible domestic entity intended to elect corporate tax treatment but inadvertently failed to file Form 8832 on time. It asked the IRS for an extension under Treasury Regulations sections 301.9100-1 and 301.9100-3. Based on the submitted facts and representations, the IRS concluded that the entity acted reasonably and in good faith and that relief would not prejudice the government. The IRS granted the extension, subject to the owner filing all required federal income and information returns for open years within 120 days and treating the entity consistently with the requested election.

Ruling snapshot

• Question: May the entity file a late Form 8832 election to be treated as an association taxable as a corporation from the requested effective date?
• Outcome: Approved, subject to a 120-day return-filing condition
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 202347013                                              Third Party Communication: None
Release Date: 11/24/2023                                       Date of Communication: Not Applicable
Index Number: 9100.00-00
                                                              Person To Contact:
----------------------------------                            ------------------------, ID No. ------------------
-----------------------------------------                     ----------------------------------------------------
------------------------------------                          Telephone Number:
--------------------------------------                        ---------------------
                                                              Refer Reply To:
                                                              CC:PSI:B03
                                                              PLR-118529-22
                                                              Date:
                                                              August 28, 2023




Legend

X                         =        ------------------------------------------------------------
State                     =        ------------------
Date                      =        ----------------------


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

       This letter responds to a letter dated August 15, 2022, and subsequent
correspondence, submitted on behalf of X by its 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.

                                                    FACTS

      The information submitted states that X was formed under the laws of State. X
represents that as of Date, X was a domestic entity eligible to elect to be treated as an
association taxable as a corporation for federal tax purposes.

       X intended to be treated as an association taxable as a corporation for federal
tax purposes effective on Date. However, X inadvertently failed to timely file Form
8832, Entity Classification Election, electing to be treated as an association taxable as a
corporation for federal tax purposes.

       X represents that it acted reasonably and in good faith. Further, X represents
that granting relief will not prejudice the interests of the government.

PLR-118529-22                                  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 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)(ii) provides that unless a domestic eligible entity elects
otherwise, the entity is 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 under § 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 cannot be more than 75 days prior to the date on which the election is
filed and cannot be more than 12 months after the date on which the election is filed.

       Section 301.9100-1(c) provides that the Commissioner has discretion to grant a
reasonable extension of time to make a regulatory election under all subtitles of the
Internal Revenue 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.

       Sections 301.9100-1 through 301.9100-3 provide the standards that the
Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-2 provides automatic extensions of time for making certain
elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.

        Under § 301.9100-3, requests 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) the granting 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 and, therefore, it is
granted an extension of time to file Form 8832 to elect to be treated as an association

PLR-118529-22                                 3

taxable as a corporation for federal tax purposes effective on Date. A copy of this letter
should be attached to the election. A copy is enclosed for that purpose.

         This ruling is contingent on the owner of X, within 120 days from the date of this
letter, filing all outstanding required federal income tax returns and information returns
(including amended returns) for all open years consistent with the requested relief. A
copy of this letter should be attached to any such returns.

       Except as specifically ruled above, we express or imply no opinion concerning
the federal tax consequences of the facts described above under any other provision of
the Internal Revenue Code.

      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 a Power of Attorney on file with this office, we are sending a
copy of this letter to your authorized representatives.

       The ruling contained in this letter is 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 a ruling, it is subject to verification on examination.



                                       Sincerely,


                                       /s/

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


Enclosure
      Copy of this letter for § 6110(k)(3) purposes



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