Corporation received 90 days to perfect its IC-DISC election

Plain-English summary

A corporation was formed to operate as an interest charge domestic international sales corporation. Its sole owner believed a prepared Form 4876-A had been properly executed and filed, but the IRS later said it could not process the election and had not received a response to earlier requests for information. Neither the owner nor the first accounting firm recalled receiving those requests, and a second firm promptly sought relief after the IRS said it could no longer accept additional information. The corporation had consistently operated and filed its first return as an IC-DISC. The IRS granted 90 days to file Form 4876-A and have the election treated as timely, without deciding substantive eligibility for IC-DISC status or benefits.

Ruling snapshot

• Question: Could the corporation receive extra time to file a valid first-year IC-DISC election?
• Outcome: approved, with 90 days to file Form 4876-A
• Key authorities: IRC § 992(b)(1); Temp. Treas. Reg. § 1.921-1T(b)(1); Treas. Reg. §§ 301.9100-1 and 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202411002                                             Third Party Communication: None
 Release Date: 3/15/2024                                       Date of Communication: Not Applicable
 Index Number: 992.02-00, 9100.22-00
                                                               Person To Contact:
 ---------------------------------                             -----------------------, ID No. -----------------
 ------------------------                                      Telephone Number:
 -----------------------                                       --------------------
 ------------------------------                                Refer Reply To:
                                                               CC:INTL:B06
                                                               PLR-117796-23
                                                               Date:
                                                               December 19, 2023


Legend

 Taxpayer                  =    ---------------------------------
 Individual                =    -------------------
 Accounting Firm 1         =    ---------------------------
 Accounting Firm 2         =    ---------------------------
 Date 1                    =    -----------------------
 Date 2                    =    ---------------------
 Year 1                    =    -------

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

This responds to a letter dated September 1, 2023, submitted by your representatives,
requesting that the Internal Revenue Service (“Service”) grant Taxpayer an extension of
time under Treas. Reg. §§ 301.9100-1 and 301.9100-3 to file Form 4876-A (“Election To
Be Treated as an Interest Charge DISC”) for Taxpayer’s first taxable year.

The ruling contained in this letter is based upon information and representations
submitted by Taxpayer and its representatives, accompanied by affidavits and penalty
of perjury statements executed by appropriate parties. This office has not verified any of
the materials submitted in support of the request for a ruling, which are subject to
verification on examination.

                                                    FACTS

Taxpayer was incorporated on Date 1 to operate as an interest charge domestic
international sales corporation (“IC-DISC”). Taxpayer is a domestic corporation wholly
owned by Individual, who is also President of Taxpayer.

Individual represents that, at all relevant times, Taxpayer relied on Accounting Firm 1 to
organize and prepare the necessary documentation for Taxpayer to be treated as an IC-

PLR-117796-23                                2

DISC. Following Taxpayer’s incorporation, Accounting Firm 1 prepared Form 4876-A for
Individual to execute and file with the Service. On or about Date 1, Individual filed what
Individual believed to be a properly prepared and executed Form 4876-A with the
Service.

In correspondence dated Date 2, the Service informed Taxpayer that it had not received
a properly executed Form 4876-A and accordingly could not process Taxpayer’s
election. The notice also informed Taxpayer that the Service had sent previous
correspondence requesting additional information needed to process Taxpayer’s
election but that Taxpayer failed to respond. Individual represents that they have no
recollection of receiving any earlier correspondence, nor are they aware of any
particular issue with Taxpayer’s election that would have prevented its being processed
by the Service.

After receiving this notice, Individual consulted Accounting Firm 1 regarding the notice.
Individual represents that Accounting Firm 1 also had no recollection of receiving any
earlier correspondence, nor was it aware of any particular issue with Taxpayer’s
election that would have prevented its being processed by the Service.

Thereafter, Individual engaged Accounting Firm 2, which contacted the Service on
Taxpayer’s behalf to discuss its election. Accounting Firm 2 represents that the Service
indicated that it could no longer accept additional information to process Taxpayer’s
election. Accounting Firm 2 promptly prepared and submitted on Taxpayer’s behalf the
request that is the subject of this ruling.

At all relevant times, Taxpayer has operated as if it were a validly elected IC-DISC,
including filing its Federal income tax return for Year 1 as an IC-DISC.

                                           LAW

Section 992(b)(1)(A) of the Internal Revenue Code (the “Code”) provides that an
election by a corporation to be treated as an IC-DISC shall be made by such
corporation for a taxable year at any time during the 90-day period immediately
preceding the beginning of the taxable year, except that the Secretary may give her
consent to the making of an election at such other times as she may designate.
Section 992(b)(1)(B) of the Code provides that the election shall be made in such
manner as the Secretary shall prescribe and shall be valid only if all persons who are
shareholders in such corporation on the first day of the first taxable year for which such
election is effective consent to such election.

Temp. Treas. Reg. § 1.921-1T(b)(1) provides, in part, that a corporation electing IC-
DISC status must file Form 4876-A and that a corporation electing to be treated as an
IC-DISC for its first taxable year must make its election within 90 days after the
beginning of that year.

PLR-117796-23                                3

Treas. Reg. § 301.9100-1(c) provides, in part, that the Commissioner may, in exercising
his discretion, grant a reasonable extension of time under the rules set forth in Treas.
Reg. §§ 301.9100-2 and 301.9100-3 to make a regulatory election under all subtitles of
the Code except subtitles E, G, H, and I.

Treas. Reg. § 301.9100-1(b) provides that a regulatory election is an election the due
date for which 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. For this purpose, an election includes an application for relief in
respect of tax.

Treas. Reg. § 301.9100-3(a) provides that requests for extensions of time for regulatory
elections that do not meet the requirements of Treas. Reg. § 301.9100-2 (automatic
extensions) must be made under the rules of Treas. Reg. § 301.9100-3, and that
requests for relief subject to Treas. Reg. § 301.9100-3 will be granted when the
taxpayer provides the evidence (including affidavits described in Treas. Reg.
§ 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer
acted reasonably and in good faith, and that the grant of relief will not prejudice the
interests of the Government.

                                       ANALYSIS

Here, Taxpayer seeks relief to make the election described in Temp. Treas. Reg.
§ 1.921-1T(b)(1), which is a regulatory election as defined in Treas. Reg. § 301.9100-
1(b). Therefore, the Commissioner has discretionary authority under Treas. Reg.
§ 301.9100-1(c) to grant Taxpayer an extension of time, provided that Taxpayer
satisfies the standards for relief set forth in Treas. Reg. § 301.9100-3, to make such
election.

Based on the facts and representations submitted with Taxpayer’s ruling request, we
conclude that Taxpayer satisfies Treas. Reg. § 301.9100-3(a). Accordingly, Taxpayer is
granted an extension of time of 90 days from the date of this ruling letter to file Form
4876-A. Such filing will be considered a timely election to be treated as an IC-DISC for
Taxpayer’s first taxable year.

The granting of an extension in this ruling letter is not a determination that Taxpayer is
otherwise eligible to make the election or to claim IC-DISC status or benefits. See
Treas. Reg. § 301.9100-1(a). Except as expressly provided herein, no opinion is
expressed or implied concerning the tax consequences of any aspect of any transaction
or item discussed or referenced in this letter. For example, no opinion is expressed
regarding the consequences to any person under section 996(g).

In accordance with section 996(g), Taxpayer should not accept any income tax treaty
claims of reduced withholding under sections 1441 or 1442 with respect to distributions
(deemed or otherwise) of accumulated DISC income.

PLR-117796-23                                           4


Taxpayer should attach a copy of this ruling letter to its Form 4876-A and Federal
income tax return for the taxable years to which this letter applies (and any other return
to which it is relevant). Alternatively, taxpayers filing their returns electronically may
satisfy this requirement by attaching a statement to their return that provides the date
and control number of the letter ruling.

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,


                                               Brad McCormack
                                               Senior Technician Reviewer, Branch 6
                                               (International)

Enclosures (2)
Copy of this letter
Copy for § 6110 purposes

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