Corporate group receives 60 days to file its consolidated return election

Plain-English summary

A newly formed parent corporation acquired an existing affiliated group and intended for its own group to elect consolidated federal income tax return treatment. A valid election was not filed by the return deadline because the parent reasonably relied on a qualified tax professional who failed to make or advise it to make the election. The parent requested relief before the IRS discovered the failure, and the relevant assessment periods remained open. The IRS granted 60 days to file a consolidated return and the required Forms 1122 under Treas. Reg. § 301.9100-3. Relief is conditioned on the group's aggregate tax liability for all affected years being no lower than it would have been with a timely election.

Ruling snapshot

• Question: Should the affiliated group receive additional time to elect consolidated return treatment?
• Outcome: Approved, with 60 days to file the consolidated return and member consents
• Key authorities: IRC § 1502; Treas. Reg. §§ 1.1502-75 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201631004 Third Party Communication: None
Release Date: 7/29/2016 Date of Communication: Not Applicable
Index Number: 9100.20-00, 1502.75-00
Person To Contact:
-------------------------------- ------------------------------------, ID No. ------
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--------------------- Telephone Number:
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------------------------------------------------- Refer Reply To:
CC:CORP:B05
PLR-104149-16
Date:
May 03, 2016

Parent = -----------------------------------------------------------
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Date 1 = -------------------------------------------------

Date 2 = -----------------

Date 3 = --------------------

Company Official & Tax Professional = -----------------------------------------------------------
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Dear -------------:

  This letter ruling responds to a letter from your authorized representative, dated

February 4, 2016, requesting an extension of time under §§ 301.9100-1 through
301.9100-3 of the Procedure and Administration Regulations to file an election. The
extension is being requested for Parent and the members of its affiliated group (the
“Parent Group”) to make an election to file a consolidated federal income tax return,
with Parent as the common parent, under § 1.1502-75(a)(1) of the Income Tax
Regulations (the “Election”) for the taxable year ending Date 3. The information
submitted in that request is summarized below.

     On Date 1, Parent was incorporated in connection with the acquisition of an

affiliated group which filed a consolidated federal income tax return (the “Acquired
Group”). On Date 2, a wholly owned indirect subsidiary corporation of Parent merged
into the common parent of Acquired Group in a cash merger.

PLR-104149-16 2

     An election for Parent Group to file a consolidated income tax return, with Parent

as the common parent, for the taxable year ending Date 3 was due on the last day
prescribed by law (including extensions of time) for the filing of Parent’s return. Parent
intended to file the Election, but for various reasons, a valid Election (i.e., the filing of
the consolidated return) was not filed by the due date of Parent’s return. After the due
date for the Election, it was discovered that the Election had not been filed.
Subsequently, this request was submitted, under § 301.9100-3, for an extension of time
to file the Election. The period of limitations on assessment under § 6501(a) has not
expired for the taxable year ending Date 3 or any subsequent taxable year. Parent has
represented that it does not seek to alter a return position for which an accuracy-related
penalty has been or could be imposed under § 6662 at the time of the request for relief
(taking into account any qualified amended return within the mean of § 1.6664-2(c)(3)).

     Section 1.1502-75(a)(1) of the Income Tax Regulations provides, in part, that an

affiliated group of corporations which did not file a consolidated return for the
immediately preceding taxable year may file a consolidated return in lieu of separate
returns for the taxable year, provided that each corporation which has been a member
of the group during any part of the taxable year for which the consolidated return is to
be filed consents, in accordance with § 1.1502-75(b) of the regulations, to the
regulations under § 1502. If a group wishes to exercise its privilege of filing a
consolidated return, such consolidated return must be filed not later than the last day
prescribed by law (including extensions of time) for the filing of the common parent’s
return.

   Under § 301.9100-1(c), the Commissioner has discretion to 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 except subtitles E, G, H, and I.

    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 a
regulatory election. Section 301.9100-1(a). Section 301.9100-2 provides automatic
extensions of time for making certain elections. Requests for relief under § 301.9100-3
will be granted when the taxpayer provides evidence to establish to the satisfaction of
the Commissioner that the taxpayer acted reasonably and in good faith, the
requirements of §§ 301.9100-1 and 301.9100-3 are satisfied, and granting relief will not
prejudice the interests of the government.

    Information, affidavits, and representations submitted by Parent and Company

Official & Tax Professional explain the circumstances that resulted in the failure to
timely file the Election. The information establishes that Parent reasonably relied on a
qualified tax professional who failed to make, or advise Parent to make, a valid election,
and that the request for relief was filed before the failure to make the Election was
discovered by the Internal Revenue Service. See § 301.9100-3(b)(1)(i) and (v).

PLR-104149-16 3

    Based on the facts and information submitted, including the representations

made, we conclude that Parent has shown it acted reasonably and in good faith, the
requirements of §§ 301.9100-1 and 301.9100-3 are satisfied, and granting relief will not
prejudice the interests of the government. Accordingly, provided that Parent Group
qualifies substantively to file a consolidated return for the applicable tax year, we grant
an extension of time, under § 301.9100-3, for sixty (60) days from the date on this letter
for Parent to file the Election (by filing a consolidated return, with Parent as the common
parent, and attaching a Form 1122 for each member of Parent Group for its taxable
year ending Date 3). Parent Group must attach a copy of this ruling letter to such return,
or if Parent Group files the return electronically, a statement must be attached to the
return that provides the date and the control number of this ruling letter.

   The above extension of time is condition on Parent Group’s tax liability (if any)

being not lower, in the aggregate, for all years to which the Election applies, than it
would have been if the Election had been timely made (taking into account the time
value of money). No opinion is expressed as to Parent Group’s tax liability for the years
involved. A determination thereof will be made by the applicable Director’s office upon
audit of the federal income tax returns involved.

   We express no opinion with respect to whether, in fact, Parent Group qualifies

substantively to file a consolidated return. In addition, we express no opinion as to the
tax effects or consequences of filing the return or the Election late under the provisions
of any other section of the Code or regulations, or as to the tax treatment of any
conditions existing at the time of, or effects resulting from, filing the return or the
Election late that are not specifically set forth in the above ruling.

   For the purposes of granting relief under § 301.9100-3, we relied on certain

statements and representations made by Parent and Company Official & Tax
Professional. However, the Director should verify all essential facts. In addition,
notwithstanding that an extension is granted under § 301.9100-3 to file the Election,
penalties and interest that would otherwise be applicable, if any, continue to apply.

  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.

    In accordance with the Power of Attorney on file with this office, copies of this

letter are being sent to your authorized representatives.

                                   Sincerely,


                                   Ken Cohen___________
                                   Ken Cohen
                                   Senior Technician Reviewer, Branch 3
                                   Office of Associate Chief Counsel (Corporate)