LLC received more time to elect corporate tax status

Plain-English summary

A limited liability company intended to be classified as an association taxable as a corporation but inadvertently failed to file Form 8832 on time. The IRS found that the regulatory requirements for relief were satisfied and granted the company 120 days from the letter date to file the election for its intended effective date. The relief depends on the company and its owners filing all necessary federal tax and information returns consistently with the election within the same period.

Ruling snapshot

• Question: Could the LLC receive more time to file Form 8832 and elect treatment as an association taxable as a corporation?
• Outcome: approved
• Key authorities: IRC § 7701; Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1 through 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                    Department of the Treasury
                                                             Washington, DC 20224

 Number: 202422008                                           Third Party Communication: None
 Release Date: 5/31/2024                                     Date of Communication: Not Applicable
 Index Number: 9100.31-00
                                                             Person To Contact:
 --------------------------------------------                --------------------, ID No. -----------------
 ----------------------------------                          Telephone Number:
 -----------------------------                               --------------------
 -------------------------                                   Refer Reply To:
 ----------------------------------                          CC:PSI:B01
                                                             PLR-118105-23
                                                             Date:
                                                             March 07, 2024




                                                  LEGEND

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


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


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


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



Dear ------------------------

This letter responds to a letter dated August 9, 2023, submitted on behalf of X by its
authorized representatives, requesting an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations to make an election under § 301.7701-3(c) to
be treated as an association taxable as a corporation.

                                                   FACTS

According to the information submitted, X was formed as a limited liability company 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
represents that it intended to be classified as an association taxable as a corporation for
PLR-118105-23                                  2

federal tax purposes effective Date 2. However, due to inadvertence, 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.

                                   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 income tax purposes. An eligible entity with two or
more owners can elect to be classified as either an association (and thus classified as 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, in part, that an eligible entity may elect to be
classified other than 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, in part, 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 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 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 not more than 6 months except in the
case of a taxpayer who is abroad), under all subtitles of the Code except subtitles E, G,
H, and I.

Section 301.9100-2 provides an automatic extension of time for making certain
elections. Section 301.9100-3 provides standards for extensions of time for making
elections that do not meet the requirements of § 301.9100-2.

Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3 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 the taxpayer
acted reasonably and in good faith, and the grant of relief will not prejudice the interests
of the government.
PLR-118105-23                                 3

                                      CONCLUSION

Based on the facts submitted and 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 Form 8832
with the appropriate service center to elect under § 301.7701-3 to be classified as an
association for 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 the facts described above under any other provision of the
Code. Specifically, we express or imply no opinion regarding whether 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 file any
income tax or information returns.

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.

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 the 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.
PLR-118105-23                                  4

In accordance with the 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:____________/s/______________
                                           Jennifer N. Keeney
                                           Senior Counsel, Branch 1
                                           Office of the Associate Chief Counsel
                                           (Passthroughs & Special Industries)




Enclosure
      Copy of letter for § 6110 purposes




cc: