IRS grants a late Qualified Opportunity Fund self-certification after an accountant's engagement omission caused a missed Form 8996

Plain-English summary

A company was set up specifically to be a Qualified Opportunity Fund (QOF), a
vehicle that invests in economically distressed "opportunity zones" and lets
investors defer and reduce capital gains taxes. To become a QOF, the entity must
self-certify each year by filing Form 8996 with its tax return by the deadline.
Here, when the company hired its accountant to prepare returns, the engagement
agreement inadvertently left out certain returns, so Form 8996 was never filed for
the first year. The company and accountant discovered the omission later, after the
deadline had passed, and the company asked the IRS for "9100" relief to make the
QOF election late. Because the company reasonably relied on a qualified tax
professional who failed to make the election, requested relief before the IRS
caught it, and granting relief would not prejudice the government, the IRS ruled the
late-filed Form 8996 is treated as timely, so the company is a QOF effective from
the intended first month. The ruling is narrow: it only fixes the timing of the
election and does not decide whether the company actually qualifies as a QOF or
whether any investments in it qualify.

Ruling snapshot

• Question: May an entity that missed the deadline get more time to file a late Form 8996 self-certifying as a Qualified Opportunity Fund?
• Outcome: Approved (late Form 8996 treated as timely; QOF effective on the intended date)
• Key authorities: IRC § 1400Z-2(d), (e)(4); Treas. Reg. § 1.1400Z2(d)-1(a); Treas. Reg. §§ 301.9100-1 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                        Department of the Treasury
                                                Washington, DC 20224

Number: 202551039                               Third Party Communication: None
Release Date: 12/19/2025                        Date of Communication: Not Applicable
Index Number: 1400Z.02-00
                                                Person To Contact:
----------------------                          --------------------, ID No. -----------------
---------------------------------------------   Telephone Number:
-------------------------                       --------------------
                                                Refer Reply To:
                                                CC:ITA:B04
                                                PLR-111420-25
                                                Date:
                                                August 05, 2025

LEGEND

Date 1           =    ------------------
Date 2           =    ----------------------
Month 1          =    ---------
Month 2          =    ------
Month 3          =    ------------
Year 1           =    -------
Year 2           =    -------
Year 3           =    -------
Accountant       =    --------------------------
State Z          =    -----------

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

This letter responds to Taxpayer's request, dated Date 1, for a private letter ruling
granting an extension of time to make a late regulatory election pursuant to §§
301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations.
Specifically, Taxpayer requests an extension of time to (1) self-certify as a Qualified
Opportunity Fund (QOF) defined in section 1400Z-2(d) of the Internal Revenue Code
(Code); and (2) be treated as a QOF, effective as of Month 1, Year 1, as provided under
Code section 1400Z-2 and Treasury Regulation § 1.1400Z2(d)-1(a).

This letter ruling is being issued electronically in accordance with Rev. Proc. 2025-1,
2025-1 I.R.B. 1. A paper copy will not be mailed to Taxpayer.

                                                    FACTS

According to the facts and representations provided, Taxpayer was organized and
incorporated under the laws of State Z on Date 2. As stated in Taxpayer's operating
agreement, executed in Month 1, Year 1, Taxpayer was formed for the purpose of being
a QOF and to invest in qualified opportunity zone property as defined in section 1400Z-
2(d)(2). Taxpayer's annual accounting period is the calendar year and Taxpayer uses
the accrual method of accounting.

Taxpayer contracted with Accountant to provide tax advisory and preparation services.
In Month 2, Year 2, Taxpayer signed an agreement with Accountant to prepare the tax
returns of Taxpayer. Due to an inadvertent omission, the agreement did not cover
certain returns for Taxpayer. Because of the omission, Taxpayer did not timely file
Form 8996, Qualified Opportunity Fund, for Year 1. In Month 3, Year 3, Accountant and
Taxpayer discovered the omission and contracted to file the missing returns. Because
the deadline for filing Form 8996 for Year 1 had already passed, Taxpayer subsequently
filed this request for an extension of time to make an election to be considered a QOF
as of Month 1, Year 1.

                                  LAW AND ANALYSIS

Section 1400Z-2(e)(4)(A) directs the Secretary to prescribe regulations for the
certification of QOFs. Treas. Reg. § 1.1400Z2(d)-1(a)(2)(i) 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.

To self-certify as a QOF, a taxpayer must file Form 8996 with its tax return for the year
to which the certification applies. Form 8996 must be filed by the due date of the tax
return (including extensions). The information provided indicates that Taxpayer intended
to self-certify as a QOF as of Month 1, Year 1.

Because Treas. Reg. § 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 §
301.9100-3(b)(1).

Treas. Reg. §§ 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.
Treas. Reg. § 301.9100-3(a) provides that requests for extensions of time for regulatory
elections (other than automatic changes covered in Treas. Reg. § 301.9100-2) will be
granted when the taxpayer acted reasonably and in good faith and granting relief will
not prejudice the interests of the Government.

Treas. Reg. § 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.

Under Treas. Reg. § 301.9100-3(b)(3), a taxpayer will not be considered to have acted
reasonably and in good faith if the taxpayer—

   (i)     Seeks to alter a return position for which an accuracy-related penalty could be
           imposed under section 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.

Treas. Reg. § 301.9100-3(c)(1) provides that the Service will grant a reasonable
extension of time 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

Based solely 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 will not prejudice the interests of the Government. Accordingly, Taxpayer has
satisfied the requirements of the regulations for the granting of relief, and Taxpayer's
late-filed Form 8996 for Year 1 certifying Taxpayer as a QOF as of Month 1, Year 1, is
considered timely filed. Taxpayer has, therefore, elected to self-certify as a QOF under
section 1400Z-2 and § 1.1400Z2(d)-1(a)(2)(i) as of Month 1, Year 1. Taxpayer should
submit a copy of this letter ruling to the IRS Service Center where Taxpayer files its
income tax returns, together with a cover letter requesting that the Service Center
associate this letter ruling with Taxpayer's Year 1 Form 1120-S, U.S. Income Tax
Return for an S Corporation.

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

This ruling addresses the granting of Treas. Reg. § 301.9100-3 relief as applied to the
election to self-certify Taxpayer as a QOF, as of Month 1, Year 1. Specifically, we have
no opinion, either express or implied, concerning whether any investments made into
Taxpayer are qualifying investments as defined in Treas. Reg. § 1.1400Z2(a)-1(b)(34)
or whether Taxpayer meets the requirements under section 1400Z-2 and the
regulations thereunder to be a QOF. Further, we also express no opinion on whether
any interest owned in any entity owned 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. We express no opinion as to whether Taxpayer's Year 1
federal income tax return is considered timely filed.

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.

                                              Sincerely,



                                              Stephen J. Toomey
                                              Senior Counsel, Branch 4
                                              Office of Associate Chief Counsel
                                              (Income Tax & Accounting)