Entity receives late association election

Plain-English summary

A domestic eligible entity intended to be treated as an association taxable as a corporation from its formation date but failed to file Form 8832 on time. Its owner consistently treated the entity as an association for federal tax purposes from that date. The IRS concluded that the requirements for discretionary relief under section 301.9100-3 were satisfied. It granted 120 days to file Form 8832 with the intended effective date. The ruling does not determine whether the entity otherwise qualifies to make the election.

Ruling snapshot

• Question: May the eligible entity make a late election to be classified as an association?
• Outcome: Yes, with 120 days to file Form 8832.
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201607018
Release Date: 2/12/2016
Index Numbers: 7701.00-00, 9100.31-00

                                                               Person To Contact:
-----------------------------------                            -----------------------, ID No. -------------------
----------------------                                         ---------------------------------------------------
---------------------------------                              Telephone Number:
---------------------------------                              ----------------------
                                                               Refer Reply To:
                                                               CC:PSI:B03 – PLR-117456-15
                                                               Date: September 30, 2015




                                                     LEGEND

X                 =                  -------------------------------------
------------------------------------------------------------

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

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

D1                =                   -------------------


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

      This letter responds to a letter dated May 18, 2015, and subsequent
correspondence submitted on behalf of X requesting an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations to file an election under
§ 301.7701-3 to be classified as an association for federal tax purposes.

                                                         FACTS

       The information submitted discloses that X was formed on D1 under the laws of
State and intended to be treated as an association for federal tax purposes effective D1.
However, X failed to timely file Form 8832, Entity Classification Election, to be classified

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PLR-117456-15

as an association for federal tax purposes. X represents that its owner, Y, has
consistently treated X as an association for federal tax purposes since D1.

                                   LAW AND ANALYSIS

        Section 301.7701-3(a) provides, in part, that a business entity that is not
classified as a corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an
eligible entity) can elect its classification for federal tax purposes as provided in
§ 301.7701-3. An eligible entity with at least two members can elect to be classified as
either an association (and thus a corporation under § 301.7701-2(b)(2)) or a
partnership, and an eligible entity with a single owner can elect to be classified as an
association or to be disregarded as an entity separate from its owner.

         Section 301.7701-3(b)(1) provides that, except as provided in § 301.7701-
3(b)(3), unless the entity elects otherwise, a domestic eligible entity is: (i) A partnership
if it has two or more members; or (ii) Disregarded as an entity separate from its owner if
it has a single owner.

       Section 301.7701-3(c)(1)(i) provides, in part, that, except as provided in
§ 301.7701-3(c)(1)(iv) and (v), an eligible entity may elect to be classified other than as
provided under § 301.7701-3(b), or to change its classification, by filing Form 8832 with
the service center designated on Form 8832.

         Section 301.7701-3(c)(1)(iii) provides, in part, that an election made under
§ 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on Form 8832
or on the date filed if no such date is specified on the election form. The effective date
specified on Form 8832 can not be more than 75 days prior to the date on which the
election is filed and can not be more than 12 months after the date on which the election
is filed.

       Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of
time to make a regulatory election, or a statutory election (but no more than six months
except in the case of a taxpayer who is abroad), under all subtitles of the Internal
Revenue Code (Code) except subtitles E, G, H, and I. Section 301.9100-1(b) provides
that the term “regulatory election” includes an election whose due date is prescribed by
a regulation published in the Federal Register.

       Sections 301.9100-1 through 301.9100-3 provide the standards the
Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-2 provides automatic extensions of time for making certain
elections. Section 301.9100-3 provides extensions of time for regulatory elections that
do not meet the requirements of § 301.9100-2.

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PLR-117456-15

       Section 301.9100-3(a) provides that requests for relief under § 301.9100-3 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.

                                      CONCLUSION

        Based solely on the facts and representations submitted, we conclude that X has
satisfied the requirements of §§ 301.9100-1 and 301.9100-3. Consequently, X is
granted an extension of time of one hundred twenty (120) days from the date of this
letter to elect under § 301.7701-3 to be treated as an association effective D1. X must
file Form 8832 within the extension period with the appropriate service center, with a
copy of this letter attached.

       Except for the specific ruling above, we express or imply no opinion concerning
the federal tax consequences of the facts of this case under any other provision of the
Code. In addition, § 301.9100-1(a) provides that the granting of an extension of time for
making an election is not a determination that the taxpayer is otherwise eligible to make
the election.

      This ruling is directed only to the taxpayer requesting it. According to
§ 6110(k)(3) of the Code, this ruling may not be used or cited as precedent.

        Under a power of attorney on file with this office, we are sending a copy of this
letter to X’s authorized representative.

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PLR-117456-15

       The ruling contained in this letter is based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the ruling request, it is subject to verification on examination.

                                            Sincerely,

                                            Associate Chief Counsel
                                            (Passthroughs & Special Industries)



                                         By:__/s/___________________________
                                            Mary Beth Carchia
                                            Senior Technician Reviewer, Branch 3
                                            Office of the Associate Chief Counsel
                                            (Passthroughs & Special Industries)



Enclosures: Copy of this letter
            Copy for § 6110 purposes