PLR 9937045: Late bond volume-cap carryforward election accepted

Plain-English summary

A state political subdivision missed the deadline to elect to carry forward part of its 1998 private activity bond volume cap for residential rental housing bonds. It discovered the omission, filed Form 8328, and requested more time before the IRS found the error. No bonds using the carryforward had been issued. The IRS granted an extension through the date the agency filed the form, allowing the stated amount to be carried forward. The ruling applied the regulatory standards for late elections under § 301.9100-3.

Ruling snapshot

• Question: Could the agency receive more time to file its § 146(f) carryforward election?
• Outcome: Approved; the deadline was extended to its filing date.
• Key authorities: IRC § 146(f); Treas. Reg. §§ 301.9100-1(c), 301.9100-3; Notice 89-12.

Full text (IRS public release)

199937045

Internal Revenue Service Department of the Treasury

Index No. 9100.00-00 Washington, DC 20224

Person to Contact:
Telephone Number:
Refer Reply to:

CC:DOM:FI&P:5/PLR-108357-99
Date:

June 7, 1999
LEGEND:

Agency =

State =

Department =

$X =

Date M =

Date N =

Dear Sir or Madam:

This is in response to a request submitted on behalf of Agency by its authorized representative for an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file a carryforward election under § 146(f) of the Internal Revenue Code.

FACTS:

Agency is a political subdivision of State authorized to issue obligations to finance exempt facilities described in
§142(a)(7) of the Code. On Date M, Department, the authority responsible for allocating State's bond volume cap, allocated
$X of State's 1998 volume cap to Agency to be used after 1998 for residential rental housing bonds.

After February 15, 1999, it was discovered by an employee

of Agency that Form 8328 (Carryforward Election of Unused Private Activity Bond Volume Cap) had inadvertently not been filed. On

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Date N a Form 8328 electing to carryforward $X of Agency's 1998 bond volume cap was filed with the Internal Revenue Service. Simultaneously, a ruling request for an extension of time to file the Form 8328 was submitted. As of Date N, the failure to make the regulatory election had not been discovered by the Internal Revenue Service. At the present time, bonds utilizing the carryforward amount have not been issued.

LAW:

Section 146(f) provides that if an issuing authority's volume cap for any calendar year after 1985 exceeds the aggregate amount of tax-exempt private activity bonds issued during the calendar year (by the authority), the authority may elect to treat all (or any portion) of the excess as a carryforward for one or more carryforward purposes.

The § 146(f) election is made by filing Form 8328 with the Internal Revenue Service Center. Under Notice 89-12, 1989-1 C.B. 633, Form 8328 must be filed by the earlier of (1) February 15 of the calendar year following the year in which the excess amount arises, or (2) the date of issue of bonds issued pursuant to the carryforward election.

Section 301.9100-1(c) of the regulations provides, in part, that the Commissioner has discretion to grant a reasonable extension of time to make a regulatory election (defined in
§ 301.9100-1(b) as an election whose due date is prescribed by regulations or by a revenue ruling, a revenue procedure, a notice, or an announcement published in the Internal Revenue

Bulletin), 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 Code except subtitles F, G, H, and J.

Sections 301.9100-3(a) through (c)(1)(i) of the regulations set forth rules that the Internal Revenue Service generally will use to determine whether, under the facts and circumstances of each situation, the Commissioner will grant an extension of time for regulatory elections that do not meet the requirements of
§ 301.9100-2. Section 301.9100-3(b) provides that subject to paragraphs (b) (3) (i) through (iii) of § 301.9100-3, when a taxpayer applies for relief under this section before the failure to make the regulatory election is discovered by the Service, the taxpayer will be deemed to have acted reasonably and in good faith. Section 301.9100-3(c) provides that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax liability in the aggregate for all years to which the regulatory election applies than the taxpayer

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would have had if the election had been timely made (taking into account the time value of money).

CONCLUSION:

Based on the facts and representations submitted, Agency is granted an extension of time to Date N to file Form 8328 for 1998. The amount of carryforward is $X.

This letter is directed only to the taxpayer who requested it. Section 6110(k)(3) 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 Agency's authorized representative.

Sincerely yours,

[illegible]
Assistant Chief Counsel
(Financial Institutions & Products)

Enclosure:
Copy for § 6110 purposes