Extra time granted for a foreign entity to file its corporation (association) election

Plain-English summary

Under the "check-the-box" rules, an eligible business entity can choose how it is taxed by filing Form 8832. A foreign entity here intended to be taxed as an association (that is, as a corporation) as of a specific date and actually filed all of its federal income tax and information returns on that basis. But it never filed the Form 8832 that formally makes the election. The entity asked the IRS for more time under the "9100 relief" rules (Treas. Reg. § 301.9100-3), which allow a late regulatory election when the taxpayer acted reasonably and in good faith and relief would not harm the government. The IRS agreed and granted 120 days from the date of the letter to file Form 8832 electing corporation status effective the intended date. The IRS expressed no opinion on whether the election is otherwise proper or on any late-filing penalties.

Ruling snapshot

• Question: May the entity get an extension of time to file Form 8832 to be classified as an association taxable as a corporation?
• Outcome: approved
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3; IRC § 965 (via Treas. Reg. § 1.965-4(c)(2))

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202425007                                             Third Party Communication: None
 Release Date: 6/21/2024                                       Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.00-00,
               9100.31-00                                      Person To Contact:
                                                               ----------------------, ID No. -----------------
 ---------------------------------------------------           Telephone Number:
 -------------------------------------------------             -------------------
 ----------------------                                        Refer Reply To:
 ------------------------------------------                    CC:PSI:B3
 --------------------------------------                        PLR-118900-23
                                                               Date:
                                                               March 26, 2024




 Legend


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

 Country        = -----------

 Date           = --------------------------



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

        This letter responds to a letter dated July 27, 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 for X to file an election under
§ 301.7701-3 to be classified as an association taxable as a corporation for federal tax
purposes.

                                                       Facts

        Based on the material submitted, X is an entity formed under the laws of Country
on Date. X represents that (1) it is a foreign entity eligible to elect to be classified as an
association taxable as a corporation for federal tax purposes effective Date and (2) it
has filed all required federal income tax and information returns consistent with X being
classified as an association taxable as a corporation effective Date. However, X failed
PLR-118900-23                                  2

to file Form 8832, Entity Classification Election, electing to be classified as an
association taxable as a corporation effective Date.

                                      Law and Analysis

        Section 301.7701-3(a) provides, in part, 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)(2)(i) provides that except as provided in § 301.7701-
3(b)(3), unless the entity elects otherwise, a foreign eligible entity is -- (A) a partnership
if it has two or more members and at least one member does not have limited liability;
(B) an association if all members have limited liability; or (C) disregarded as an entity
separate from its owner if it has a single owner that does not have limited liability.

         Section 301.7701-3(b)(2)(ii) provides that for purposes of § 301.7701-3(b)(2)(i), a
member of a foreign eligible entity has limited liability if the member has no personal
liability for the debts of or claims against the entity by reason of being a member.

        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. If
an election specifies an effective date more than 75 days prior to the date on which the
election is filed, it will be effective 75 days prior to the date it was filed.

        Section 301.9100-1(c) provides that the Commissioner in exercising the
Commissioner's discretion 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 Internal Revenue Code (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.
PLR-118900-23                                 3

      Section 301.9100-2 provides the standards the Commissioner will use to
determine whether to grant an automatic extension of time for making certain elections.

       Section 301.9100-3 provides the guidelines for granting 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 the 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.

                                        Conclusion

        Based solely on the facts submitted and the representations made, we conclude
that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, we
grant X an extension of time of one hundred twenty (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 federal tax purposes effective Date. A copy of
this letter should be attached to the Form 8832.

       Except as specifically set forth above, we express or imply no opinion concerning
the federal tax consequences of the facts of this case under any other provision of the
Code and the regulations thereunder. 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 or imply no opinion concerning the assessment of any interest,
additions to tax, additional amounts, or penalties for failure to file a timely income tax or
information return with respect to any taxable year that may be affected by this ruling.
For example, we express or imply 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.

       If applicable, X's election to be classified as an association taxable as a
corporation is disregarded for purposes of determining the amounts of all § 965
elements of all United States shareholders of X if the election otherwise would change
the amount of any § 965 element of any such United States shareholder. See § 1.965-
4(c)(2) of the Income Tax Regulations.

      We are directing this ruling only to the taxpayer that requested 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
PLR-118900-23                                 4

by an appropriate party. While this office has not verified any of the material submitted
in support of the requested ruling, it is subject to verification on examination.

        Pursuant to a power of attorney on file with this office, we are sending a copy of
this letter to X's authorized representatives.


                                           Sincerely,
                                           Associate Chief Counsel
                                          (Passthroughs & Special Industries)


                                      By: ___________________________
                                          Mary Beth Carchia
                                          Senior Technician Reviewer, Branch 3
                                          Office of the Associate Chief Counsel
                                          (Passthroughs & Special Industries)


Enclosure:
      Copy of this letter for § 6110 purposes




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