Late IC-DISC election receives a 60-day extension

Plain-English summary

A corporation was formed to operate as an interest charge domestic international sales corporation. Its accounting firm prepared Form 4876-A, an officer signed it, and a copy was placed in the corporation's files, but the IRS later confirmed that it had never received the form. The corporation had meanwhile filed IC-DISC returns for two years believing the election had been made. The IRS concluded that the discretionary-relief standards in Treasury Regulation section 301.9100-3 were satisfied. It granted 60 days to file Form 4876-A, which would be treated as a timely election for the corporation's first taxable year, without deciding whether the corporation otherwise qualified for IC-DISC status.

Ruling snapshot

• Question: Could the corporation receive additional time to file its first-year IC-DISC election after the signed form was not received by the IRS?
• Outcome: approved, with 60 days to file Form 4876-A
• Key authorities: IRC § 992(b)(1); Temp. Treas. Reg. § 1.921-1T(b)(1); Treas. Reg. §§ 301.9100-1 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 201649004                                             Third Party Communication: None
Release Date: 12/2/2016                                       Date of Communication: Not Applicable
Index Number: 992.02-00
                                                              Person To Contact:
--------------------------------------                        -----------------------------, ID No. -------------
------------------------------                                -----------------
----------------------                                        Telephone Number:
---------------------------------------                       ----------------------
                                                              Refer Reply To:
                                                              CC:INTL:B06
In re: --------------------------------------                 PLR-107637-16
                                                              Date:
                                                              August 30, 2016




Taxpayer                =   --------------------------------------
Company                 =   ---------------------------------------------
Accounting Firm         =   --------------
Date 1                  =   ---------------------------
Date 2                  =   --------------------------
Year 1                  =   -------
Year 2                  =   -------
State                   =   -----------


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

This replies to your letter dated October 26, 2015, requesting that the Internal Revenue
Service (“Service”) grant Taxpayer an extension of time under Treas. Reg. § 301.9100-
3(a) to file Form 4876-A (“Election to be Treated as an Interest Charge DISC”), effective
as of Date 1, for Taxpayer’s first taxable year.

The rulings contained in this letter are based upon information and representations
submitted by Taxpayer and Accounting Firm, and accompanied by affidavits and
penalties of perjury statements executed by appropriate parties. This office has not
verified any of the materials submitted in support of the request for rulings. They are
subject to verification on examination.
PLR-107637-16                                2

FACTS

Taxpayer was incorporated in State on Date 1 for the purpose of qualifying and
operating as an interest charge domestic international sales corporation (“IC-DISC”).
Taxpayer is wholly owned by Company.

After formation, Accounting Firm prepared and delivered Form 4876-A to Taxpayer.
Accounting Firm advised Taxpayer to mail Form 4876-A to the Service within 90 days of
Date 1. On Date 2, an officer of Taxpayer signed Form 4876-A, and a copy of the
signed form was placed in Taxpayer’s files. Afterward, Taxpayer believed that the
inclusion of a copy of Form 4876-A in its files indicated that the form had been properly
and timely filed after it was signed. Taxpayer subsequently timely filed Form 1120-IC-
DISC for Year 1 and Year 2.

During Year 2, Taxpayer received a notice from the Service informing Taxpayer that it
failed to timely file Form 4876-A. Taxpayer corresponded with the Service about the
possibility that Taxpayer had in fact timely filed Form 4876-A. However, the Service
confirmed that it had not received Form 4876-A. Taxpayer requests a private letter
ruling for an extension of time to file Form 4876-A for its first taxable year.

LAW AND ANALYSIS

Section 992(b)(1)(A) of the Internal Revenue Code provides that an election by a
corporation to be treated as a DISC shall be made by such corporation for a taxable
year at any time during the 90-day period immediately preceding the beginning of the
taxable year, except that the Secretary may give his consent to the making of an
election at such other times as he may designate.

Section 992(b)(1)(B) provides that such election shall be made in such manner as the
Secretary shall prescribe and shall be valid only if all persons who are shareholders in
such corporation on the first day of the first taxable year for which such election is
effective consent to such election.

Temp. Treas. Reg. § 1.921-1T(b)(1) provides, in part, that a corporation electing IC-
DISC status must file Form 4876-A and that a corporation electing to be treated as an
IC-DISC for its first taxable year shall make its election within 90 days after the
beginning of the year.

Treas. Reg. § 301.9100-1(c) provides, in part, that the Commissioner, in exercising the
Commissioner’s discretion, may grant a reasonable extension of time under the rules
set forth in Treas. Reg. §§ 301.9100-2 and 301.9100-3 to make a regulatory election
under all subtitles of the Code except subtitles E, G, H, and I.
PLR-107637-16                                    3

Treas. Reg. § 301.9100-1(b) provides that a regulatory election is an election whose
due date is prescribed by a regulation published in the Federal Register, or a revenue
ruling, revenue procedure, notice, or announcement published in the Internal Revenue
Bulletin. For this purpose, an election includes an application for relief in respect of tax.

Treas. Reg. § 301.9100-3(a) provides that requests for extension of time for regulatory
elections that do not meet the requirements of Treas. Reg. § 301.9100-2 (automatic
extensions) must be made under the rules of Treas. Reg. § 301.9100-3. Requests for
relief subject to Treas. Reg. § 301.9100-3 will be granted when the taxpayer provides
the evidence (including affidavits described in Treas. Reg. § 301.9100-3(e)) to establish
to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good
faith, and that the grant of relief will not prejudice the interests of the Government.

Based on the facts and representations submitted with your ruling request, we conclude
that Taxpayer satisfies Treas. Reg. § 301.9100-3(a). Accordingly, Taxpayer is granted
an extension of time of 60 days from the date of this ruling letter to file Form 4876-A.
Such filing will be treated as a timely election to be treated as an IC-DISC for
Taxpayer’s first taxable year.

The granting of an extension in this ruling letter is not a determination that Taxpayer is
in fact eligible to make the election or to claim IC-DISC status or benefits. See Treas.
Reg. § 301.9100-1(a). Taxpayer should attach a copy of this ruling letter to its Federal
income tax return for the taxable years to which this letter applies.

This ruling is directed only to the taxpayer requesting it, and section 6110(k)(3) provides
that it may not be used or cited as precedent. Except as expressly provided, this letter
does not express or imply any opinion concerning the tax consequences of any aspect
of any transaction or item discussed or referenced in this letter.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representatives.


                                    Sincerely,


                                    _____________________________________
                                    Christopher J. Bello
                                    Chief, Branch 6
                                    Office of Associate Chief Counsel (International)

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