Fund received 60 days to make late QOF self-certification

Plain-English summary

A partnership was formed to operate as a qualified opportunity fund, and its operating agreement required it to self-certify by filing Form 8996. Its accounting firm timely filed Form 1065 but omitted Form 8996 because of staffing turnover. The IRS found that the partnership reasonably relied on the firm, acted in good faith, and would not gain a lower aggregate tax liability from late relief. It granted 60 days to file Form 8996 with an amended return or administrative adjustment request, effective from the fund's intended first month. The ruling did not decide whether the fund or its investments otherwise met opportunity-zone requirements.

Ruling snapshot

• Question: Could a partnership receive additional time to self-certify as a qualified opportunity fund after its accountant omitted Form 8996?
• Outcome: Relief approved, with 60 days to file Form 8996
• Key authorities: IRC § 1400Z-2; Treas. Reg. §§ 1.1400Z2(d)-1, 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202538008
Release Date: 9/19/2025
Index Number: 1400Z.02-00, 9100.00-00
Person To Contact:
---------------------------------------- ---------------------, ID No. -----------------
------------------------------------ Telephone Number:

------------------------ Refer Reply To:
CC:ITA:B08
PLR-103880-25
Date:
June 23, 2025
VIA E-FAX

LEGEND

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

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

Accountant Q = --------------------------

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

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

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

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

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

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

Year 1 = -------

Year 2 = -------

Member A = -----------------------------------------------------------

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Member B = ----------------------

Member C = ----------------------

Member D = ----------------

Member E = -----------------------

X = ---

Y = ------------

Z = ------------

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

This letter responds to Taxpayer's request for a letter ruling dated Date 3. Specifically,
Taxpayer requests relief under §§ 301.9100-1 and 301.9100-3¹ for an extension of time
to (1) make an election to self-certify as a qualified opportunity fund (QOF), as defined
in section 1400Z-2(d), effective as of Month 1, the first month in which Taxpayer
intended to be a QOF, and (2) to be treated as a QOF, effective as of Month 1, as
provided under section 1400Z-2(d) and section 1.1400Z2(d)-1(a) of the Income Tax
regulations.

FACTS

According to the information and representations provided, Taxpayer, a limited liability
company treated as a partnership for Federal income tax purposes, was formed on
Month 1 in State. Pursuant to the terms of the Operating Agreement, Taxpayer was
formed as a QOF for the primary purpose of investing into, holding, managing, and
disposing of, qualified opportunity zone property, and to do anything and all things
permitted by section 1400Z-2 and the regulations thereunder necessary or appropriate
for this purpose. The operating agreement further states that Taxpayer will self-certify
as a QOF by filing Form 8996, Qualified Opportunity Fund, with the Taxpayer’s federal
tax return for the taxable year in which the certification is made. Taxpayer represents
that it operates on a calendar year tax year and utilizes the cash method of accounting.
Taxpayer indicated, for its Year 1 taxable year, that Taxpayer had five members,
Member A, Member B, Member C, Member D, and Member E, who contributed X, Y, Z,
Y, and Z, respectively, for units in Taxpayer.

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-103880-25 3

Taxpayer represents that it intended to elect to be a QOF beginning in Month 1.
Taxpayer engaged Accounting Firm P to prepare Taxpayer’s Federal income tax returns
for Year 1. Accountant Q represents that Taxpayer’s Form 1065 was filed on Date 1 for
the tax year of Year 1. Accountant Q represents that Taxpayer’s Form 8996 was
inadvertently omitted from Taxpayer’s Year 1 Form 1065. Accountant Q represents that
the omission was due to staffing turnover at Accounting Firm P and discovered on
Month 2. As such, Taxpayer did not timely file its Form 8996 for Year 1. Upon
discovery of the omission, Accounting Firm P notified Taxpayer, and advised Taxpayer
to seek a ruling.

Taxpayer represents that all its federal income tax returns have been filed consistent
with the intended election to self-certify as a QOF and the granting of its requested
ruling would not result in Taxpayer having a lower tax liability in the aggregate for Year
1 and all subsequent taxable years affected by the election than if the election had been
timely made.

LAW AND ANALYSIS

Section 1400Z-2(e)(4) of the Internal Revenue Code 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
Income Tax 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 Instructions to Form 8996 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 Procedure and Administration 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) 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;

PLR-103880-25 4

(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 § 6662 at the time the taxpayer requests relief, and
the new position requires or permits a regulatory election for which relief is
requested;

(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) 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)
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 timely file
its Form 8996 by the due date of its federal income tax return for Year 1 due to
Taxpayer’s reasonable reliance on Accounting Firm P and Accounting Firm P’s failure to
file a Form 8996 on behalf of Taxpayer. Based on the facts and information submitted
and the representations made, including affidavits and representations under penalties
of perjury, we conclude that Taxpayer has acted reasonably and in good faith, and that
the granting of relief will not prejudice the interests of the Government. Accordingly,
based solely on the facts and information submitted, and the representations made in
the ruling request, we grant Taxpayer an extension of 60 days from the date of this
letter ruling to file a Form 8996 to make the election to self-certify as a QOF under
section 1400Z-2 and section 1.1400Z2(d)-1(a)(2)(i). The election must be made on a

PLR-103880-25 5

completed Form 8996 attached to the Taxpayer’s amended tax return or administrative-
adjustment request (as applicable).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 Internal Revenue Service associate this ruling with the amended Year 1 tax
return.

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
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 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.

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.

Pursuant to the Form 2848, Power of Attorney and Declaration of Representative, on
file, we are sending a copy of this letter to Taxpayer's authorized representatives.

PLR-103880-25 6

Sincerely,

Erika Reigle
Acting Branch Chief, Branch 8
Office of Chief Counsel
(Income Tax & Accounting)

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