Entity received more time to elect corporate tax classification

Plain-English summary

An eligible business entity intended to be treated as an association taxable as a corporation but did not timely file Form 8832. The entity represented that it acted reasonably and in good faith and that late relief would not prejudice the government. The IRS granted 120 days to file the election with the requested effective date. The relief is conditional on the entity and its owners filing all required federal income tax and information returns, including amended returns when needed, consistently with the corporate classification within the same 120-day period.

Ruling snapshot

• Question: May the entity file a late Form 8832 election to be classified as an association taxable as a corporation?
• Outcome: Approved, with 120 days to file the election and all affected returns consistently
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202418002                                              Third Party Communication: None
 Release Date: 5/3/2024                                         Date of Communication: Not Applicable
 Index Number: 7701.01-00, 9100.31-00
                                                                Person To Contact:
 -----------------------------------------------------          -----------------------------------, ID No. -------
 ----------------------------------------------------------     -----------------
 -----------------------------                                  Telephone Number:
 ------------------------------                                 --------------------
 ---------------------------------                              Refer Reply To:
                                                                CC:PSI:B03
                                                                PLR-115507-23
                                                                Date:
                                                                February 02, 2024



                                                    LEGEND

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

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

Date 2       =        ----------------------

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


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

        This letter responds to a request dated July 5, 2023 submitted on behalf of X by
its authorized representatives, requesting an extension of time under § 310.9100-3 of
the Procedure and Administration Regulations to elect to classify X as an association
taxable as a corporation, effective Date 2.

                                                     FACTS

        According to the information submitted, X was formed on Date 1 under the laws
of State. X represents that it is an entity eligible to elect to be classified as an
association taxable as a corporation for federal tax purposes. X intended to be
classified as an association taxable as a corporation for federal tax purposes effective
Date 2. However, X failed to timely file Form 8832, Entity Classification Election, to be
treated as an association taxable as a corporation for federal tax purposes effective
Date 2.
PLR-115507-23                                  2

        X represents that it has acted reasonably and in good faith and that granting
relief will not prejudice the interests of the government for all taxable years affected by
the election.

                                    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. 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) provides that except as provided in § 301.7701-3(b)(3),
unless the entity elects otherwise, a domestic eligible entity is: (i) a partnership if it has
two or more members; or (ii) disregarded as an entity separate from its owner if it has a
single 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) by filing Form 8832 with the
appropriate service center. 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 date specified on Form 8832 cannot be more than 75 days before 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 may grant a reasonable
extension of time 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 the taxpayer
provides evidence to establish to the satisfaction of the Commissioner that (1) the
PLR-115507-23                                 3

taxpayer acted reasonably and in good faith, and (2) granting relief will not prejudice the
interest of the Government.

                                      CONCLUSION

        Based solely on the information provided and the representations made, we
conclude 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
Form 8832 with the appropriate service center to elect to be classified as an association
taxable as a corporation for U.S. federal tax purposes, effective Date 2. A copy of this
letter should be attached to the Form 8832.

        This ruling is contingent on X and its owners 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. A copy of this letter should be attached to the
returns.

        Except as specifically set forth above, we express or imply no opinion
 concerning the federal tax consequences of any aspect of any transaction or item
 discussed or referenced in this letter. 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.

          Further, 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 X and any affected taxpayers are
 entitled to relief from any penalty on the basis that any taxpayer had reasonable cause
 for failure to timely file any income tax or information returns.

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

      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.
PLR-115507-23                                  4

         In accordance with the Power of Attorney on file with this office, a copy of this
letter is being sent to your authorized representatives.




                                       Sincerely,

                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)




                                   By: _______________________________
                                       Robert D. Alinsky
                                       Branch Chief, Branch 3
                                       Office of the Associate Chief Counsel
                                       (Passthroughs & Special Industries)




Enclosure:
     Copy for § 6110 purposes




cc: