Foreign entity receives 120 days to make a late corporate classification election

Plain-English summary

A foreign eligible entity intended to elect association status so it would be taxed as a corporation for U.S. federal tax purposes, but it did not timely file Form 8832. The entity represented that it acted reasonably and in good faith and that relief would not prejudice the government. The IRS found that the regulatory-election relief requirements were satisfied. It gave the entity 120 days to file Form 8832 with the requested effective date. The entity and its owners must also file all required returns for open years consistently with the relief, potentially including Form 5471. The ruling does not decide whether the entity is otherwise eligible to make the classification election.

Ruling snapshot

• Question: May the foreign eligible entity make a late election to be classified as an association taxable as a corporation?
• Outcome: Approved, with a 120-day filing period
• Key authorities: Treas. Reg. §§ 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: 202443006 Third Party Communication: None
Release Date: 10/25/2024 Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
9100.31-00 Person To Contact:
------------------------------------------------ -----------------, ID No. -----------------
------------------------------- Telephone Number:
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------------------------ Refer Reply To:
--------------------------------- CC:PSI:B03
PLR-102301-24
Date:
July 31, 2024

Legend:

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

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

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

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

 This letter responds to a letter dated January 18, 2024, and subsequent

correspondence, 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 an
association taxable as a corporation for federal tax purposes.

                                               FACTS

  According to the information submitted, X was formed on Date under the laws of

Country. X states that it is a foreign entity eligible to elect to be classified as an
association taxable as a corporation for federal tax purposes effective Date. X
represents that X intended to elect to be treated as an association taxable as a
corporation effective Date. However, X failed to file Form 8832, Entity Classification
Election, electing to be classified as an association taxable as a corporation for federal
tax purposes effective Date.

  X represents that it acted reasonably and in good faith. Further, X represents

that granting relief will not prejudice the interests of the government.

PLR-102301-24 2

                               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.

   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 the 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.

  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 six 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) defines a regulatory
election to include an election whose due date is prescribed by a regulation published in
the Federal Register.

  Sections 301.9100-1 through 301.9100-3 provide the standards that the

Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-2 provides the rules governing automatic extensions of time
for making certain elections. Section 301.9100-3 provides extensions of time for making
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 (including affidavits described in § 301.9100-3(e)) to establish to the

PLR-102301-24 3

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 facts submitted and representations made, we conclude that

X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, X is
granted 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 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.

   This ruling is contingent on X and the owners of X filing within 120 days from the

date of this letter all required returns for all open years consistent with the requested
relief. These returns may include, but are not limited to Form 5471, Information Return
of U.S. Persons With Respect to Certain Foreign Corporations, such that these forms
reflect the consequences of the relief granted in this letter. A copy of this letter should
be attached to any such returns.

  Except as specifically set forth above, we express or imply no opinion concerning

the facts of this case 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.

  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 requested ruling, it is subject to verification on examination.

  This ruling is directed 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.

PLR-102301-24 4

 In accordance with a power of attorney on file with this office, we are sending a

copy of this letter to your authorized representative.

                                           Sincerely,


                                           Associate Chief Counsel
                                           (Passthroughs & Special Industries)




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

Enclosure:
Copy of this letter for § 6110 purposes

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