LLC received 120 days to elect disregarded-entity treatment

Plain-English summary

A limited liability company had elected to be treated as a corporation and later planned to change to disregarded-entity status. The company inadvertently did not file the classification election by the required deadline. The IRS determined that the standards for a late regulatory election were met. It granted 120 days to file Form 8832 with the intended effective date. Any necessary original or amended federal tax and information returns for the company and its owner also had to be filed consistently within that 120-day window.

Ruling snapshot

• Question: Could the LLC receive additional time to elect disregarded-entity treatment after missing the Form 8832 deadline?
• Outcome: approved, with 120 days to file Form 8832 and consistent returns
• Key authorities: Treas. Reg. §§ 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: 202401005                                            Third Party Communication: None
 Release Date: 1/5/2024                                       Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.31-00
                                                              Person To Contact:
 ------------------------------                               ----------------------, ID No. -----------------
 -----------------------------------------                    Telephone Number:
 ---------------------------------------                      --------------------
 --------------------------------                             Refer Reply To:
 --------------------------------------------------------     CC:PSI:B01
                                                              PLR-107813-23
                                                              Date:
                                                              October 05, 2023




                                                   LEGEND


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

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

 Date1 = --------------------------

 Date2 = ----------------------


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

This letter responds to a letter dated April 7, 2023, submitted on behalf of X by its
authorized representative, requesting an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations for X to file an election under § 301.7701-3
to be classified as a disregarded entity for federal tax purposes.

                                                     FACTS

The information submitted states that X was formed under the laws of State as a limited
liability company on Date1. X elected to be treated as an association taxable as a
corporation effective Date1. X intended to be treated as a disregarded entity effective
Date2, but inadvertently failed to timely make that election.

PLR-107813-23                                  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 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(c)(1)(i) provides 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. Under § 301.7701-
3(c)(1)(iii), 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 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 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 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 a 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 grant of relief will not prejudice the interests of the Government.

                                       CONCLUSION

Based solely on the information submitted and the representations made, we conclude
that the requirements of § 301.9100-1 and 301.9100-3 have been satisfied. 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 and elect to be treated as a disregarded entity
effective Date2. A copy of this letter should be attached to the Form 8832.

PLR-107813-23                                  3

This ruling is contingent on X and its owner filing, within 120 days from the date of this
letter, to the extent necessary or appropriate, all required federal income tax returns and
information returns (including amended returns) consistent with the requested relief
granted in this letter.

Except as specifically set forth above, no opinion is expressed concerning the federal
tax consequences of the facts described above under any other provision of the Code.
In addition, § 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.

We express no opinion concerning the assessment of any interest, additions to tax,
additional amounts, or penalties for failure to file a timely tax or information return with
respect to any taxable year that may be affected by this ruling. For example, we
express no opinion as to whether a taxpayer is entitled to relief from any penalty on the
basis that the taxpayer had reasonable cause for failure to file timely any income tax or
information returns.

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 ruling request, it is subject to verification on examination.

This ruling is directed to the taxpayer requesting it. Section 6110(k)(3) provides that it
may not be used or cited as precedent.

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,

                                        Holly Porter
                                        Associate Chief Counsel
                                        (Passthroughs & Special Industries)

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

Enclosure
      Copy for § 6110 purposes

PLR-107813-23   4

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