Foreign entity gets 120 more days to file a late "check-the-box" election to be a disregarded entity

Plain-English summary

A foreign business entity wanted to be treated as a "disregarded entity" for U.S.
tax purposes, meaning it would be ignored as separate from its single owner (so the
owner reports the entity's activity directly). To get that treatment, it had to file
Form 8832, the entity classification or "check-the-box" election, by a deadline. It
missed the deadline by mistake. Under Treasury Regulation section 301.9100-3, the
IRS can grant more time for a missed election if the taxpayer acted reasonably and
in good faith and letting it fix the error will not hurt the government. The IRS
found both tests met and gave the entity 120 days from the date of the letter to
file the late election, effective as of its intended date. The relief is conditioned
on the entity and its U.S. owners filing all consistent returns (including forms like
5471, 8858, and 8865) within the same window. This is the routine "we missed a tax
election deadline, please let us fix it" relief, applied here to a cross-border
entity-classification choice.

Ruling snapshot

• Question: Should a foreign eligible entity get an extension of time to file a late Form 8832 electing disregarded-entity status?
• Outcome: Approved (120-day extension granted)
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1 through 301.9100-3; Treas. Reg. § 1.965-4(c)(2)

Full text (IRS public release)

 Internal Revenue Service                                     Department of the Treasury
                                                              Washington, DC 20224

 Number: 202508003                                            Third Party Communication: None
 Release Date: 2/21/2025                                      Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.00-00
                                                              Person To Contact:
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 ---------------------                                        Refer Reply To:
 ---------------------------------------------------------    CC:PSI:01
                                                              PLR-108778-24
                                                              Date:
                                                              November 4, 2024




LEGEND

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

 Date 1       = ------------------------------------------------------------------------------------------------
                ------------------------------------------------------------------------------------------------
 Date 2       = ------------------

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



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

This letter responds to a letter dated April 29, 2024, and additional correspondence,
submitted on behalf of X by X's 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 a disregarded entity for federal tax
purposes.

FACTS

According to the information submitted, X was formed on Date 1 under the laws of
Country. X represents that it is a foreign entity eligible to elect to be classified as a
disregarded entity for federal tax purposes. However, X inadvertently failed to timely file
Form 8832, Entity Classification Election, to be classified as a disregarded entity for
federal tax purposes effective Date 2.
PLR-108778-24                                  2

X represents that it acted reasonably and in good faith. X also represents that granting
the requested relief will not prejudice the interests of the government.

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, 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 IRS Service Center designated on the form.

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 such date is specified on the election form. The effective date specified
on Form 8832 can not be more than 75 days prior to the date on which the election is
filed and can not 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 it was filed, it
will be effective 75 days prior to the date it was filed.

Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of time
under the rules set forth in §§ 301.9100-2 and 301.9110-3 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 except
subtitles E, G, H, and I. Section 301.9100-1(b) defines a "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 an election. Section
PLR-108778-24                                 3

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

Section 301.9100-3(a) provides that requests for relief under § 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 (i) the
taxpayer acted reasonably and in good faith, and (ii) 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
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 to be disregarded as an entity separate from
its owner for federal tax purposes effective Date 2. A copy of this letter should be
attached to the Form 8832 filed for X.

This ruling is contingent on X and any of its U.S. owners filing, within 120 days from the
date of this letter, all required federal income tax and information returns (including
amended returns) for all open years consistent with the requested relief granted in this
letter. These returns include, but are not limited to, (i) Forms 5471, Information Returns
of U.S. Persons with Respect to Certain Foreign Corporations, (ii) Forms 8858,
Information Return of U.S. Persons with Respect to Foreign Disregarded Entities
(FDEs) and Foreign Branches (FBs), and (iii) Forms 8865, Return of U.S. Persons with
Respect to Certain Foreign Partnerships, 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.

If applicable, this election is disregarded for purposes of determining the amounts of all
section 965 elements of all United States shareholders of X if the election otherwise
would change the amount of any section 965 element of any such United States
shareholder. See § 1.965-4(c)(2) of the Income Tax Regulations.

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 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 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
PLR-108778-24                                  4

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 only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent
to your authorized representatives.




                                           Sincerely,


                                           Associate Chief Counsel
                                           (Passthroughs & Special Industries)



                                      By: ____________________________
                                          Joy Spies
                                          Senior Technician Reviewer, Branch 1
                                          Office of Associate Chief Counsel
                                          (Passthroughs & Special Industries)


Enclosure:
Copy for § 6110 purposes
PLR-108778-24                                            5

cc:
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