New group received 60 days to perfect its consolidated return election

Plain-English summary

A corporation became the common parent of a new affiliated group after another corporation distributed its stock. The group filed a consolidated return, but the return and related election were not timely. The parent showed that it reasonably relied on a qualified tax professional who failed to make or recommend the election, and it requested relief before the IRS discovered the failure. The IRS granted 60 days to amend the already-filed consolidated return and attach the ruling, provided the group otherwise qualified to file consolidated and its aggregate tax liability was not lower than if the election had been timely. The ruling left any otherwise applicable penalties and interest in place.

Ruling snapshot

• Question: Could the new affiliated group receive extra time to make its consolidated-return election after filing the return late?
• Outcome: Approved, subject to substantive eligibility, amendment within 60 days, and a no-lower-tax condition.
• Key authorities: Treas. Reg. §§ 1.1502-75(a)(1), 301.9100-1, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                          Department of the Treasury
                                                                  Washington, DC 20224

Number: 201825016                                                 Third Party Communication: None
Release Date: 6/22/2018                                           Date of Communication: Not Applicable
Index Number: 9100.20-00, 1502.75-00
                                                                  Person To Contact:
-------------------------------------                             ---------------------------, ID No. ---------------
---------------------------------------------                     -----------------
-------------------------                                         Telephone Number:
----------------------------                                      ----------------------
-------------------------------------------                       Refer Reply To:
                                                                  CC:CORP:1
                                                                  PLR-130512-17
                                                                  Date:
                                                                  March 14, 2018




Legend

Parent                     =         -------------------------------------
------------------------------------------------------------

Corp X                     =         -----------------------------------------------
------------------------------------------------------------

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

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

Company Official &
Tax Professional           =         ---------------------
-----------------------------------------------------------------
-------------------------------------------------------------------------


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

This letter responds to a letter dated October 5, 2017, submitted on behalf of Parent,
requesting an extension of time under §§ 301.9100-1 through 301.9100-3 of the
Procedure and Administration Regulations to make an election. The extension is being
requested for Parent Group, as defined below, to make an election under § 1.1502-
75(a)(1) of the Income Tax Regulations to file a consolidated Federal income tax return
for the tax year ending on Date 2 (the “Election”). Additional information was submitted
in a letter dated January 4, 2018. The material information submitted for consideration
is summarized below.
PLR-130512-17                                 2

Parent became the common parent of a new affiliated group (“Parent Group”) as the
result of the distribution of the stock of Parent by Corp X on Date 1. Parent Group filed
a consolidated return for the tax year ending on Date 2, but for various reasons, the
consolidated return was not timely filed. After discovery of the missed Election, Parent
submitted this request for an extension of time under § 301.9100-3 to file a valid
Election. Parent Group has represented that it is not attempting to alter a return
position taken 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 meaning of § 1.6664-2(c)(3)). The period of limitations on
assessment under § 6501(a) has not expired for the tax year ending on Date 2 or any
subsequent tax year.

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, and that granting relief will not
prejudice the interests of the government. Section 301.9100-3(a).

The time for filing the Election is fixed by the regulations (i.e., § 1.1502-75(a)(1)).
Therefore, the Commissioner has discretionary authority under § 301.9100-3 to grant an
extension of time for Parent Group to file the Election, provided Parent 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 a
valid election. The information establishes that Parent reasonably relied on a qualified
tax professional who failed to make, or advise Parent to make, the Election, and that the
request for relief was filed before the failure to timely make the Election was discovered
by the Internal Revenue Service. See § 301.9100-3(b)(1)(i) and (v).

Based on the facts and information submitted, including the representations made, we
conclude that Parent has 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 tax year ending on Date 2, an
extension of time is granted under § 301.9100-3, until 60 days from the date on this
letter, for Parent to file the Election. Parent Group, having already filed a consolidated
PLR-130512-17                                  3

return for the tax year, must amend the return by attaching a copy of this letter to the
return, or if Parent Group files its returns electronically, Parent Group may satisfy this
requirement by attaching a statement to its return that provides the date on, and the
control number (PLR-130512-17) of, this letter ruling.

The above extension of time is conditioned 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 the taxpayers’ tax liability for the years involved.
A determination thereof will be made by the Director’s office upon audit of the Federal
income tax returns involved.

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

For 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 letter is directed only to the taxpayer who requested it. Section 6110(k)(3) provides
that it may not be used or cited as precedent.

Pursuant to the power of attorney on file in the office, a copy of this letter is being sent
to your authorized representative.

                                       Sincerely,


                                       _Ken Cohen____________________
                                       Ken Cohen
                                       Chief, Branch 3
                                       Office of Associate Chief Counsel (Corporate)



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