IRS grants 90 days for a late partnership-classification election

Plain-English summary

A domestic limited liability company intended to elect partnership treatment for federal tax purposes, effective on a redacted date, but did not timely file Form 8832. Entity-classification elections are regulatory elections, so the IRS may extend the deadline when the taxpayer acted reasonably and in good faith and relief would not prejudice the government. Based on the submitted facts and representations, the IRS found those requirements satisfied. It granted the company 90 days from the ruling date to file Form 8832 with a copy of the ruling attached.

Ruling snapshot

• Question: May the limited liability company receive extra time to elect partnership classification on Form 8832?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                          Department of the Treasury
                                                                  Washington, DC 20224

Number: 201620005                                                 Third Party Communication: None
Release Date: 5/13/2016                                           Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00
                                                                  Person To Contact:
-----------------------------------                               --------------------, ID No. ----------------
--------------------------------------------                      Telephone Number:
----------------------                                            --------------------
 ----------------------------------------                         Refer Reply To:
                                                                  CC:PSI:B01
                                                                  PLR-131568-15
                                                                  Date:
                                                                  February 08, 2016




Legend:


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

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

D                 =        ------------------------


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

       This letter responds to your letter dated September 21, 2015, and subsequent
correspondence, written on behalf of X, requesting an extension of time under
§§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to file
an entity classification election.

                                                      FACTS

       The information submitted states that X is a limited liability company formed
under the laws of State. X intended to elect to be treated as a partnership for federal
tax purposes, effective D. The election, however, was not timely filed.

                                           LAW AND ANALYSIS

      Section 301.7701-3(a) provides 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
PLR-131568-15                                  2

elect its classification for federal tax purposes. Elections are necessary only when an
eligible entity does not want to be classified under the default classification or when an
eligible entity chooses to change its classification.

        Section 301.7701-3(b)(1) provides that, except for certain existing entities
described in § 301.7701-3(b)(3), unless a domestic eligible entity elects otherwise, the
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 that an eligible entity may elect to be
classified other than as provided under § 301.7701-3(b) by filing Form 8832, Entity
Classification Election, with the appropriate service center. Under § 301.7701-
3(c)(1)(iii), this election will be effective on the date specified by the entity on Form 8832
or on the date filed if no such date is specified. The date specified on Form 8832
cannot be more than 75 days prior to 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 Code, except
E, G, H, and I. Section 301.9100-1(b) defines the term “regulatory election” as including
an election whose deadline 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 making elections that do
not meet the requirements of § 301.9100-2. Requests for relief under § 301.9100-3 will
be granted when the taxpayer provides evidence to establish that the taxpayer acted
reasonably and in good faith, and that granting relief will not prejudice the interests of
the government.

                                       CONCLUSION

      Based solely on the facts submitted and representations made, we conclude that
X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3 and, therefore, it is
granted an extension of time of ninety (90) days from the date of this letter to file a Form
8832 to elect to be treated as a partnership for federal tax purposes, effective D. A
copy of this letter should be attached to the election. A copy is enclosed for that
purpose.

       Except as specifically set forth above, we express or imply no opinion concerning
the federal tax consequences of the facts described above under any other provision of
the Internal Revenue Code.
PLR-131568-15                                3


      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,

                                      Associate Chief Counsel
                                      (Passthroughs & Special Industries)



                                By: David R. Haglund
                                    David R. Haglund
                                    Chief, Branch 1
                                    Office of the Associate Chief Counsel
                                    (Passthroughs & Special Industries)

Enclosures (2)
      Copy of this letter
      Copy for § 6110 purposes


cc: