Late qualified opportunity fund self-certification accepted

Plain-English summary

A partnership intended to operate as a qualified opportunity fund but failed to include Form 8996 with its first-year return. Its accounting firm did not advise it of the filing requirement and later incorrectly advised against seeking relief. After new counsel discovered the problem, the partnership filed an administrative adjustment request with Form 8996 and requested an extension. The IRS found reasonable reliance on a qualified tax professional, good faith, and no prejudice to the government. It treated the Form 8996 as timely filed, while expressly declining to decide whether the partnership otherwise qualifies as a qualified opportunity fund or whether its investments qualify.

Ruling snapshot

• Question: May a partnership's late Form 8996 be treated as timely so it can self-certify as a qualified opportunity fund?
• Outcome: Approved, the Form 8996 filed with the administrative adjustment request is treated as timely
• Key authorities: IRC § 1400Z-2; Treas. Reg. §§ 1.1400Z2(d)-1(a)(2)(i), 301.9100-1, 301.9100-2, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202533002 Third Party Communication: None
Release Date: 8/15/2025 Date of Communication: Not Applicable
Index Number: 9100.00-00, 1400Z.02-00
Person To Contact:
------------------------------------------------ ---------------------, ID No. -----------------
------------------------------------------ Telephone Number:
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---------------------------- Refer Reply To:
CC:ITA:B08
PLR-101585-25
Date:
May 20, 2025

                                                LEGEND

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

Partnership Representative =-------------------------------------------

Accounting Firm = ----------------------

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

State = -------------------

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

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

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

Date 3 = ------------------

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

Year 1 = --------------------------

Year 2 = --------------------------
PLR-101585-25 2

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

This letter responds to Taxpayer’s request for a letter ruling dated Date 1. Taxpayer
requests relief under sections 301.9100-1 and 301.9100-31 of the Procedure and
Administration Regulations for an extension of time to file a Form 8996, Qualified
Opportunity Fund, to self-certify as a qualified opportunity fund, as defined in section
1400Z-2(d) (QOF), effective as of Month 1, the first month in which Taxpayer intended
to be a QOF.

                                          FACTS

According to the information and representations provided, Taxpayer, a limited liability
company classified as a partnership for federal tax purposes, was formed on Date 2 in
State for the purpose of investing in qualified opportunity zone property within the
meaning of section 1400Z-2(d).

Taxpayer represents that it intended to elect to be a QOF beginning in Month 1.
Taxpayer and Partnership Representative were unaware of any reporting requirements
with respect to Taxpayer’s intention to self-certify as a QOF. Instead, Taxpayer relied on
Accounting Firm to prepare its Federal income tax returns and meet the requirements of
a QOF for Year 1. Although Accounting Firm prepared Taxpayer’s tax returns, and
included Schedule K-1 statements indicating that Taxpayer qualified as a QOF,
Accounting Firm never advised Taxpayer of their obligation to file Form 8996 for such
year or for any subsequent tax year. Relying on this incorrect advice, Taxpayer never
self-certified as a QOF.

As a result, on Date 3 one of Taxpayer’s members informed Partnership Representative
of having received correspondence from the Service indicating that such member’s
investment in Taxpayer was not associated with a certified QOF. Accounting Firm
erroneously advised Taxpayer not to file a request for relief pursuant to §§ 301.9100-1
and 301.9100-3 regarding the failure to file Form 8996, erroneously believing that the
member had incorrectly recorded a capital contribution to the qualified opportunity zone
business (QOZB) as a capital contribution to the Taxpayer. Accounting Firm also
erroneously believed that the QOZB was a certified QOF, and no Form 8996 was
necessary for Taxpayer.

In Month 2, Partnership Representative engaged Law Firm to assist with an unrelated
matter. Law Firm discovered that Taxpayer never self-certified as a QOF and
immediately recommended amending Taxpayer’s Federal income tax return for Year 1
and requesting a private letter ruling for relief pursuant to §§ 301.9100-1 and 301.9100-

3. On Date 4, Taxpayer timely filed its Year 2 Federal tax return and an administrative
   adjustment request for Year 1 to include Form 8996 as part of its Year 1 Federal income
   tax return and thereby self-certify as a QOF for Year 1.
   1 Unless otherwise specified, all “section” references are to sections of the Internal Revenue Code (Code)

and all “§” references to sections of the Treasury Regulations (26 CFR Part 1) or (26 CFR Part 301).
PLR-101585-25 3

                                LAW AND ANALYSIS

Section 1400Z-2(e)(4) directs the Secretary to prescribe such regulations as may be
necessary to carry out the purposes of section 1400Z-2, including rules for the
certification of QOFs. Section 1.1400Z2(d)-1(a)(2)(i) of the regulations provides that the
self-certification of a QOF must be timely-filed and effectuated annually 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. The Form 8996 Instructions published pursuant to
these regulations specify that to self-certify as a QOF, a taxpayer must file Form 8996
with its tax return for the year to which the certification applies by the due date of the tax
return (including extensions).

Section 301.9100-3(a) of the regulations provides that requests for extensions of time
for regulatory elections (other than automatic extensions 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 the grant of relief will not prejudice
the interests of the Government.

Section 301.9100-3(b)(1) of the regulations 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.

In addition, § 301.9100-3(b)(3) provides that a taxpayer is deemed not to have acted
reasonably and in good faith if the taxpayer—

   (i) seeks to alter a return position for which an accuracy-related penalty has been
   or could be imposed under section 6662 at the time the taxpayer requests relief,
   and the new position requires or permits a regulatory election for which relief is
   requested;

PLR-101585-25 4

   (ii) was fully informed in all material respects of the required election and related
   tax consequences but chose not to make 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)(1) of the regulations provides that the Commissioner will grant a
reasonable extension of time to make the regulatory election only when the interests of
the Government will not be prejudiced by the granting of relief. Section 301.9100-
3(c)(1)(i) of the regulations 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).

                               CONCLUSION

The information and representations provided indicates that Taxpayer did not file its
Form 8996 by the due date of its income tax return for Year 1 due to Taxpayer’s
reasonable reliance on Accounting Firm’s failure to include the Form 8996 with
Taxpayer’s Form 1065. Based on the information provided, including affidavits and
representations under penalties of perjury, we conclude that Taxpayer has acted
reasonably and in good faith, and that granting a reasonable extension of time for
Taxpayer to file Form 8996 will not prejudice the interests of the Government.
Consequently, the Form 8996 attached to Taxpayer’s Form 1065 for Year 1 filed on
Date 4 as part of Taxpayer’s administrative adjustment request for Year 1 is considered
timely filed, and Taxpayer has thereby made the election under section 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 Service Center where Taxpayer files its returns along with
a cover letter requesting that the Service associate this ruling with the Form 1065 filed
as part of Taxpayer’s administrative adjustment for Year 1.

                                  CAVEATS

The granting of an extension of time in this ruling letter is not a determination that
Taxpayer is otherwise eligible to self-certify as a QOF. See § 301.9100-1(a).

This ruling is based upon facts and representations submitted by the Taxpayer and
accompanied by penalty of perjury statements executed by the appropriate parties. This
office has not verified any of the material submitted in support of the request for a ruling.
However, as part of an examination process, the Service may verify the factual
information, representations, and other data submitted.

Except as expressly provided herein, no opinion is either expressed or implied
concerning the tax consequences of any aspect of any transaction or item discussed or
PLR-101585-25 5

referenced in this letter. Specifically, we have 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
section 1400Z-2 and the regulations thereunder to be treated as a QOF. In addition, we
also express no opinion on whether any interest owned in any entity by Taxpayer
qualifies as qualified opportunity zone property, as defined in section 1400Z-2(d)(2), or
whether such entity would be treated as a qualified opportunity zone business, as
defined in section 1400Z-2(d)(3). We express no opinion regarding the tax treatment of
the instant transaction under the provisions of any other sections of the Internal
Revenue Code or regulations that may be applicable, or regarding the tax treatment of
any conditions existing at the time of, or effects resulting from, the instant transaction.

A copy of this letter must be attached to any tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the
letter ruling. Taxpayers that have previously filed a return or administrative adjustment
requests attaching Form 8996 should submit a copy of this letter ruling to the Service
Center where Taxpayer files its returns along with a cover letter requesting that the
Service associate this ruling with the previous filing(s).

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. Enclosed is a copy of the letter ruling showing
the deletions proposed to be made when it is disclosed under section 6110.

                                         Sincerely,



                                         Frank W. Dunham III
                                         Senior Counsel, Branch 8
                                         Office of Associate Chief Counsel
                                         (Income Tax & Accounting)

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