9100 relief for a foreign entity's late check-the-box election to be disregarded

Plain-English summary

A foreign entity wanted to be treated as a disregarded entity for US federal tax purposes, effective from the date it was formed. A disregarded entity is ignored as separate from its owner, so its income and deductions flow directly onto the owner's return. That treatment is elected by filing Form 8832, the check-the-box election, but the entity missed the deadline. It asked the IRS for an extension of time under Treasury Regulation section 301.9100-3. The IRS found the entity acted reasonably and in good faith and that relief would not prejudice the government. It granted 120 days from the date of the letter to file Form 8832 with the requested effective date. Relief is conditioned on the entity and its owners filing all consistent returns (such as Forms 5471, 8865, and 8858) within 120 days. The IRS did not decide whether the entity is otherwise eligible for the classification it chose.

Ruling snapshot

• Question: May a foreign entity that missed the deadline to elect disregarded-entity status get an extension of time to file Form 8832?
• Outcome: approved
• Key authorities: IRC § 7701; 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: 202505012                                              Third Party Communication: None
 Release Date: 1/31/2025                                        Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.31-00
                                                                Person To Contact:
 ------------------------------                                 ----------------------, ID No. -----------------
 -------------------------------                                Telephone Number:
 ------------------------------------------------------------   --------------------
 --------------------                                           Refer Reply To:
 -----------------------------                                  CC:PSI:B01
 ----------------------------------------                       PLR-109224-24
                                                                Date:
                                                                October 22, 2024




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

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

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

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

This letter responds to a letter dated February 7, 2024, 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 a disregarded entity for federal tax purposes.

                                                     FACTS

The information submitted states that X was formed under the laws of Country on
Date1. X represents that it is a foreign entity eligible to elect to be treated as a
disregarded entity for federal tax purposes effective Date 1. However, X failed to timely
file Form 8832, Entity Classification Election, electing to classify X as a disregarded
entity effective Date1.

                                           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 as provided in § 301.7701-3. An eligible
entity with at least two members can elect to be classified as either an association or a
PLR-109224-24                                  2

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, 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, in part, 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 the election provided 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 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 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 a taxpayer provides
evidence (including affidavits described in § 301.9100-3(e)) to establish to the
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.
PLR-109224-24                                 3

                                      CONCLUSION

Based solely on the information submitted and the 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 a Form
8832 with the appropriate service center to elect to be treated as a disregarded entity
effective Date 1. 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, the following forms: (i) Form 5471,
Information Return of U.S. Persons With Respect to Certain Foreign Corporations,
(ii) Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships,
and (iii) Form 8858, Information Return of U.S. Persons With Respect to Foreign
Disregarded Entities and Foreign Branches, 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, no opinion is expressed concerning the federal
tax consequences of the facts described above 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.

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 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.

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 ruling request, it is subject to verification on examination.

This ruling is directed to the taxpayer requesting it. Section 6110(k)(3) provides that it
may not be used or cited as precedent.
PLR-109224-24                                           4

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent
to X’s authorized representative.

                                               Sincerely,

                                               Holly Porter
                                               Associate Chief Counsel
                                               (Passthroughs & Special Industries)




                                               Christiaan T. Cleary
                                               Senior Technician Reviewer, Branch 1
                                               Office of the Associate Chief Counsel
                                               (Passthroughs & Special Industries)


Enclosure
      Copy for § 6110 purposes


     cc:
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