9100 relief treating a late Form 8996 as timely to self-certify a partnership as a Qualified Opportunity Fund

Plain-English summary

This letter grants a late-filing extension for an Opportunity Zone election, on facts very similar to a companion ruling in the same release week. A Qualified Opportunity Fund (QOF) self-certifies by filing Form 8996 with a timely tax return. Here, an LLC taxed as a partnership was formed to operate as a QOF, but because of a miscommunication among the manager and two CPAs (each CPA assumed the other was engaged), the partnership never timely filed a Form 7004 extension or a Form 1065 with Form 8996 attached, so it failed to self-certify. After the mix-up surfaced, the taxpayer had the late return and Form 8996 filed and requested relief. Finding that the taxpayer reasonably relied on a qualified tax professional who failed to make the election, was not using hindsight, and that relief would not lower its aggregate tax, the IRS treated the late Form 8996 as timely, so the partnership is treated as having self-certified as a QOF for the year. This ruling was issued electronically under Rev. Proc. 2024-1.

Ruling snapshot

• Question: May the partnership get an extension of time so that its late Form 8996 is treated as timely for self-certifying as a Qualified Opportunity Fund under IRC § 1400Z-2?
• Outcome: approved (late Form 8996 treated as timely)
• Key authorities: Treas. Reg. §§ 301.9100-1, -3; IRC § 1400Z-2; Treas. Reg. § 1.1400Z2(d)-1(a)(2)(i)

Full text (IRS public release)

Internal Revenue Service                                         Department of the Treasury
                                                                 Washington, DC 20224

Number: 202503006                                                Third Party Communication: None
Release Date: 1/17/2025                                          Date of Communication: Not Applicable
Index Number: 9100.00-00, 1400Z.02-00,
              1400Z.01-00.                                       Person To Contact:
                                                                 ---------------------, ID No. -----------------
--------------------                                             Telephone Number:
------------------------------------                             --------------------
----------------------------                                     Refer Reply To:
---------------------------------                                CC:ITA:B04
                                                                 PLR-108211-24
                                                                 Date:
                                                                 October 18, 2024




                                                   Legend

Taxpayer                    =     ----------------------------------------------

Tax Year                    =     ------------------

Manager                     =     ----------------------------

CPA1                        =     -----------------------------------------------
                                  -----------------------------

CPA2                        =     -----------------------------------------------
                                  --------------------------------

Law Firm                    =     --------------------------------

Year 1                      =     -------

Month 1                     =     ---------------------

Month 2                     =     --------------

Month 3                     =     -------------------

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

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

Date 3                      =     --------------------------
PLR-108211-24                                            2

 Date 4                      =   ------------------

 Date 5                      =   ------------------

 Date 6                      =   ---------------------

 State A                     =   -------------

 State B                     =   ---------

 X                           =   ---




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

This letter responds to Taxpayer’s request, dated Date 6, for a private letter ruling.
Specifically, Taxpayer requests relief, under §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations for Taxpayer’s Form 8996, Qualified
Opportunity Fund, to be treated as timely for purposes of making the election, under §
1.1400Z2(d)-1(a)(2)(i) of the Income Tax Regulations: (1) to self-certify as a qualified
opportunity fund (“QOF”), as defined in § 1400Z-2(d) of the Internal Revenue Code ,
and (2) to be treated as a QOF, effective Month 1, the month in which Taxpayer was
formed (“Request”).1

This letter ruling is being issued electronically in accordance with Rev. Proc. 2024-1,
2024-1 I.R.B. 1. A paper copy will not be mailed to Taxpayer.

                                                  FACTS

Based on the provided information and representations, Taxpayer was organized on
Date 3 as a limited liability company under the laws of State A and is treated as a
partnership for Federal income tax purposes. Taxpayer has a tax year-end of Tax Year.
Taxpayer was formed for the purpose of operating as a QOF and investing in qualified
opportunity zone property as defined in § 1400Z-2(d)(2).

Manager is Taxpayer’s appointed partnership representative in all Federal income tax
matters. Over several years prior to Year 1, Manager retained CPA1 to prepare some,
but not all, tax returns for Manager and various entities in which Manager held an
ownership interest. CPA1, a certified public accountant licensed by State B, has more
than X years of experience.


1 Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code

or the Treasury Regulations (26 CFR Part 1) or (26 CFR Part 301) as applicable.
PLR-108211-24                                3

Shortly before Date 1, Manager advised CPA1 of Manager’s intention to invest in a
partnership structured as a QOF and to seek advice from CPA2 and Law Firm on the
structuring and compliance requirements of a QOF. CPA2, a certified public accountant
licensed by State B, has more than X years of experience.

During the period between Date 1 and Date 2, Manager asked CPA1 to participate on
several conference calls with Law Firm and CPA2 on which the participants discussed
QOF-related matters pertaining to Taxpayer. Manager also informed CPA2 of the
longstanding professional relationship between CPA1 and Manager.

Manager continued to retain CPA1 to prepare various tax returns for which the latter
had been previously engaged to prepare in prior years, but CPA1 and Manager did not
execute an engagement letter for the preparation of Taxpayer’s Form 1065, U.S. Return
of Partnership Income, for Year 1.

Due to a misunderstanding, CPA1 and CPA2 each assumed that the other was
responsible for the preparation of Taxpayer’s Year 1 tax return. While preparing various
Year 2 tax returns for Manager during Month 2, CPA1 asked CPA2 to provide a copy of
Taxpayer’s Year 1 Form 8996 as filed with Taxpayer’s Year 1 tax return. CPA2
responded that it had never been engaged by Manager to prepare either Taxpayer’s
Year 1 return or Form 8996. On Date 4, CPA1 informed CPA2 that the former likewise
had not been so engaged. Shortly thereafter, CPA2 informed Manager that Taxpayer
had failed to timely file for Year 1 either a Form 7004, Application for Automatic
Extension of Time to File Certain Business Income Tax, Information, and Other Returns,
or a Form 1065 with a Form 8996 attached. Consequently, Taxpayer failed to self-certify
as a QOF beginning as of Month 1.

Shortly thereafter, Manager engaged CPA2 to prepare Taxpayer’s late Year 1 tax
return, which was subsequently filed on Date 5 and this Request for relief, which the
latter began drafting during Month 3.

Taxpayer represents that granting relief under § 301.9100-3 will not result in a lower tax
liability in the aggregate for all tax years affected by the election. Taxpayer further
represents that its actions are not described in § 301.9100-3(b)(3).

                                  LAW AND ANALYSIS

Section 1400Z-2(e)(4)(A) directs the Secretary to prescribe regulations for the
certification of QOFs. Section 1.1400Z2(d)-1(a)(2) of the Income Tax Regulations
provides the rules for an entity to self-certify as a QOF. Section 1.1400Z2(d)-1(a)(2)(i)
provides that an entity electing to be certified as a QOF must do so annually on a
timely-filed return in such form and manner as may be prescribed by the Commissioner
of Internal Revenue in the Internal Revenue Service forms or instructions, or in
publications or guidance published in the Internal Revenue Bulletin.
PLR-108211-24                                4

To self-certify as a QOF, a taxpayer must file Form 8996 with its tax return for the year
in which the certification applies. The Form 8996 must be filed by the due date
(including extensions) of the tax return. The information provided indicates that
Taxpayer did not timely file Form 8996 beginning with Year 1 due to a
miscommunication among CPA1, CPA2, and Manager.

Sections 301.9100-1 through 301.9100-3 provide the standards the Service will use to
determine whether to grant an extension of time to make a regulatory election. Section
301.9100-3(a) provides that requests for extensions of time for regulatory elections
(other than automatic changes covered in § 301.9100-2) will be granted when the
taxpayer provides evidence (including affidavits) to establish that the taxpayer acted
reasonably and in good faith and granting relief will not prejudice the interests of the
Government. Section 301.9100-1(b) defines the term “regulatory election” as including
any election whose due date is prescribed by a regulation published in the Federal
Register. Section 1.1400Z2(d)-1(a)(2)(i) sets forth the manner and timing for electing to
be a QOF and electing to self-certify as a QOF. Because § 1.1400Z2(d)-1(a)(2)(i) sets
forth the manner and timing for an entity to self-certify as a QOF, these elections are
regulatory elections, as defined in § 301.9100-1(b).

Section 301.9100-3(b)(1) provides that a taxpayer is deemed to have acted reasonably
and in good faith if the taxpayer—

       (i) Requests relief before the failure to make the regulatory election is discovered
       by the Service;

       (ii) Failed to make the election because of intervening events beyond the
       taxpayer’s control;

       (iii) Failed to make the election because, after exercising reasonable diligence,
       the taxpayer was unaware of the necessity for the election;

       (iv) Reasonably relied on the written advice of the Service; or

       (v) Reasonably relied on a qualified tax professional, and the professional failed
       to make, or advise the taxpayer to make, the election.

For purposes of paragraph (b), a taxpayer is not considered to have reasonably relied
on a qualified tax professional if the taxpayer knew or should have known that the
professional was not competent to render advice on the regulatory election or was not
aware of all relevant facts. See § 301.9100-3(b)(2).

Under § 301.9100-3(b)(3), a taxpayer will not be considered to have acted reasonably
and in good faith if the taxpayer—
PLR-108211-24                                 5

       (i) Seeks to alter a return position for which an accuracy-related penalty could be
       imposed under § 6662 at the time the taxpayer requests relief and the new
       position requires a regulatory election for which relief is requested;

       (ii) Was fully informed of the required election and related tax consequences, but
       chose not to file the election; or

       (iii) Uses hindsight in requesting relief. If specific facts have changed since the
       original deadline that make the election advantageous to a taxpayer, the Service
       will not ordinarily grant relief.

Section 301.9100-3(c) provides that the Service will grant a reasonable extension of
time to make a regulatory election only when the interests of the Government will not be
prejudiced by the granting of relief. Section 301.9100-3(c)(i) provides that the interests
of the Government are prejudiced if granting relief would result in a taxpayer having a
lower tax liability in the aggregate for all taxable years affected by the election than the
taxpayer would have had if the election had been timely made (taking into account the
time value of money). Further, under § 301.9100-3(c)(ii), the interests of the
Government are ordinarily prejudiced if the taxable year in which the regulatory election
should have been made or any taxable year that would have been affected by the
election had it been timely made are closed by the period of limitations on assessment
under § 6501(a) before the taxpayer’s receipt of a ruling granting relief under this
section.

                                      CONCLUSION

Based on the facts and information submitted and the representations made, we
conclude that Taxpayer has acted reasonably and in good faith, and that the granting of
relief would not prejudice the interests of the Government.

Accordingly, based solely on the facts and information submitted, and the
representations made in the Request, Taxpayer has satisfied the requirements of the
regulations for the granting of relief, and Taxpayer’s Form 8996, attached to Taxpayer’s
Form 1065 for Year 1, filed on Date 5, shall be considered timely filed. Therefore,
Taxpayer has thereby made the election under § 1400Z-2 and § 1.1400Z2(d)-1(a)(2)(i)
to self-certify as a QOF for Year 1. Taxpayer should submit a copy of this letter ruling to
the IRS Service Center where Taxpayer files its income tax returns, along with a cover
letter requesting that the Service associate this ruling with Taxpayer’s Year 1 income
tax return.

                                         CAVEATS

This ruling is based upon facts and representations submitted by Taxpayer and
accompanied by a penalty of perjury statement executed by an appropriate party. This
office has not verified any of the material submitted in support of the request for a ruling.
PLR-108211-24                                             6

However, as part of an examination process, the Service may verify the information,
representations, and other data submitted.

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. Specifically, we express no opinion, either express or implied, concerning
whether any investments made in Taxpayer are qualifying investments as defined in §
1.1400Z2(a)-1(b)(34) or whether Taxpayer meets the requirements under § 1400Z-2
and the regulations thereunder to be a QOF. Further, we express no opinion on whether
any interest owned in any entity by Taxpayer qualifies as qualified opportunity zone
property, as defined in § 1400Z-2(d)(2), or whether such entity would be treated as a
qualified opportunity zone business, as defined in § 1400Z-2(d)(3). Finally, we express
no opinion regarding any other sections of the Code or regulations that may be
applicable, or the tax treatment of any conditions existing at the time of, or effects
resulting from, Taxpayer’s election.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

In accordance with the Form 2848, Power of Attorney and Declaration of
Representative, on file with this office, a copy of this letter is being sent to Taxpayer's
authorized representatives.



                                                 Sincerely,




                                                 Alexa T. Dubert
                                                 Senior Technician Reviewer, Branch 4
                                                 Office of Associate Chief Counsel
                                                 (Income Tax & Accounting)

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