PLR 9947023: Late small foreign sales corporation election gets extra time

Plain-English summary

A parent formed a foreign corporation intending to elect small foreign sales corporation status, but its Form 8279 was not filed on time. The parent believed the form and instructions were misplaced during an office move and sought relief before the IRS discovered the missed filing. The IRS found that the taxpayer met the good faith and government prejudice requirements for an extension under the election relief regulations. It gave the taxpayer 30 days from the ruling letter's date to file Form 8279 for the tax year that began when the corporation was formed. The ruling does not decide whether the corporation otherwise qualifies for the elected treatment.

Ruling snapshot

• Question: May the corporation file its small foreign sales corporation election after the regulatory deadline?
• Outcome: Approved: 30 additional days from the ruling date to file Form 8279.
• Key authorities: Temp. Treas. Reg. § 1.921-1T(b)(1), Q&A 1; Treas. Reg. §§ 301.9100-1 and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Index Number: 9100.18-00
Washington, DC 20224

Number: 199947023
Person to Contact:
Release Date: 11/26/1999
Telephone Number:

Refer Reply To:
CC:INTL:PLR:108354-99
Date:
August 31, 1999

In re:

LEGEND

Taxpayer
=

Parent
=

Date A
=

Date B
=

Dear :

This replies to a letter dated April 1, 1999, in which Taxpayer requests an extension of time under Treas. Reg. § 301.9100-3 to file Form 8279, Election To Be Treated as a FSC or as a Small FSC, pursuant to Temp. Treas. Reg. § 1.921-1T(b)(1), Q&A 1, effective for the tax year beginning on Date A. The information submitted for consideration is substantially as set forth below.

The ruling contained in this letter is predicated upon facts and representations submitted by the 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. Verification of the factual information, representations, and other data may be required as a part of the audit process.

Parent incorporated Taxpayer on Date A in a foreign country with the intention that Taxpayer would elect treatment as a small foreign sales corporation on Form 8279 in a timely manner. The final date on which Form 8279 should have been filed was Date B.

Before Date B, Parent received from the management company, which assisted with

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In re: PLR:108354-99
the formation of Taxpayer, a blank Form 8279 and instructions to complete and file Form 8279 within 90 days of Date A. About five months after Date A, Parent discovered that Form 8279 had not been filed. Parent believes that Form 8279 and the instructions were misplaced while relocating its corporate offices to a new location, which was around the same time when Parent received Form 8279 and the instructions from the management company. Taxpayer is applying for relief before the failure to file Form 8279 is discovered by the IRS .

Treas. Reg. § 301.9100-1(c) provides that the Commissioner in exercising the Commissioner’s discretion may grant a reasonable extension of time under the rules set forth in § 301.9100-3 to make a regulatory election under all subtitles of the Internal Revenue Code except subtitles E, G, H, and I.

Treas. Reg. § 301-9100-3 provides rules for extensions of time for making regulatory elections when the deadline for making the election is other than a due date prescribed by statute. A regulatory election means an election whose due date is prescribed by a regulation, a revenue ruling, revenue procedure, notice, or announcement. § 301.9100-1(b).

Treas. Reg. § 301.9100-3(a) provides that requests for relief subject to this section 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 the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

In the present situation, §1.921-1T(b)(1), Q&A 1, fixes the time to elect treatment as an FSC or small FSC. Thus, the Commissioner has discretionary authority pursuant to
§ 301.9100-1(c) to grant Taxpayer an extension of time, provided that Taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

Based on the facts and circumstances of this case, we conclude that Taxpayer satisfies § 301.9100-3(a). Accordingly, Taxpayer is granted an extension of time until 30 days from the date of this ruling letter to file Form 8279 effective for the tax year beginning on Date A.

This ruling is directed only to the taxpayer who requested it. I.R.C. § 6110(j)(3) provides that it may not be used or cited as precedent.

No ruling has been requested, and none is expressed, as to the application of any other section of the Code or regulations to the facts presented.

Pursuant to a power of attorney on file in this office, a copy of this letter is being sent to

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In re: PLR:108354-99
the Taxpayer and the other authorized representative.

Sincerely,

/s/ Allen Goldstein
Allen Goldstein
Reviewer
Office of the Associate Chief Counsel (International)