Corporation gets more time to file the election to be treated as an IC-DISC after its form went missing

Plain-English summary

An interest-charge domestic international sales corporation (IC-DISC) is a
special export tax vehicle that lets qualifying exporters defer some U.S. tax on
export income. To claim that status, a corporation must file Form 4876-A within
90 days after the start of its first tax year. Here a newly formed corporation
intended to be an IC-DISC and, through its law firm, executed and (the firm says)
mailed Form 4876-A, but the IRS never received it, discovering the gap only after
the corporation later filed its IC-DISC return. The corporation asked for an
extension under the "9100 relief" rules. Because the Form 4876-A deadline is set
by regulation rather than statute, the IRS can grant extra time when the taxpayer
acted reasonably and in good faith, such as by relying on a tax professional. The
IRS granted 60 days to file the form, which will then count as a timely election.
The IRS cautioned that granting the extension does NOT decide whether the
corporation actually qualifies for IC-DISC status.

Ruling snapshot

• Question: May a corporation get an extension of time to file Form 4876-A electing IC-DISC status for its first year?
• Outcome: Approved (60-day extension granted; eligibility for IC-DISC status not decided)
• Key authorities: IRC § 992(b); Temp. Treas. Reg. § 1.921-1T(b)(1); Treas. Reg. § 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201839007                                              Third Party Communication: None
Release Date: 9/28/2018                                        Date of Communication: Not Applicable
Index Number: 9100.22-00, 992.02-00
                                                               Person To Contact:
-------------------------                                      ------------------------, ID No. ------------------
----------------------------------                             ----------------------------------------------------
-------------------                                            Telephone Number:
 --------------------------------                              ----------------------
                                                               Refer Reply To:
                                                               CC:INTL:B06
                                                               PLR-103932-18
                                                               Date:
                                                               June 28, 2018

                  TY:---------
Legend
Taxpayer = ----------------------------------
Law Firm = ----------------------------------------------
Partnership 1= ---------------------------
Partnership 2 = ----------------------------
Partnership 3 = -----------------------------
Partnership 4 = -----------------------------
Partner 1 = ---------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
Partner 2 = ---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Partner 3 = ---------------------------------------------------------------------------------------------------
----------------------------------
Partner 4 = ------------------------------
President = -------------------------
Date 1 = -----------------------------
Date 2 = -------------------------
Date 3 = ----------------------------
Date 4 = ---------------------------


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

This responds to a letter dated January 29, 2018, submitted by Law Firm requesting
that the Internal Revenue Service (“Service”) grant Taxpayer an extension of time under
Treas. Reg. §§ 301.9100-1 and 301.9100-3 to file Form 4876-A (“Election To Be
Treated as an Interest Charge DISC”) for Taxpayer’s first taxable year.

The rulings contained in this letter are based upon information and representations
submitted by Taxpayer and Law Firm, and accompanied by penalties of perjury
statements executed by the 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.

Facts

Taxpayer is a domestic corporation wholly owned by Partnership 1, Partnership 2,
Partnership 3, and Partnership 4. These Partnerships are equally owned by Partner 1,
Partner 2, Partner 3, and Partner 4. Taxpayer was incorporated on Date 1 and was
intended to be treated as an interest charge domestic international sales corporation
(“IC-DISC”). President of Taxpayer relied on Law Firm for advice and assistance with
arranging for Taxpayer to qualify as an IC-DISC, including preparation and filing of Form
4876-A. Taxpayer executed Form 4876-A on Date 2, and Law Firm, in its affidavit,
avers that it mailed this form to the IRS but is unclear why the IRS did not receive it.

On Date 3, Taxpayer’s Form 1120-IC-DISC (“Interest Charge Domestic International
Sales Corporation Return”) was filed for its taxable year ended Date 4. Taxpayer later
received correspondence from the Service stating that it had received a Form 1120-IC-
DISC for Taxpayer, but had not received a Form 4876-A for Taxpayer.

Law Firm submitted this request for relief on behalf of Taxpayer under Treas. Reg.
§ 301.9100-3 for an extension of time to file Form 4876-A.

Law and Analysis

Section 992(b)(1)(A) of the Internal Revenue Code (“Code”) provides that an election by
a corporation to be treated as a DISC1 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) of the Code 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 such 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 that 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

1
    As used in this letter, the terms “IC-DISC” and “DISC” have the same meaning.

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.

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.

In the present situation, the election described in Temp. Treas. Reg. § 1.921-1T(b)(1) is
a regulatory election as defined in Treas. Reg. § 301.9100-1(b). Therefore, the
Commissioner has discretionary authority under Treas. Reg. § 301.9100-1(c) to grant
Taxpayer an extension of time, provided that Taxpayer satisfies the standards for relief
set forth in Treas. Reg. § 301.9100-3.

Based on the facts and representations submitted with Taxpayer’s 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 Form
4876-A and Federal income tax return for the taxable years to which this letter applies.

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. Except as expressly provided
herein, 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 representative.


                                       Sincerely,




                                       Christopher J. Bello
                                       Branch Chief, Branch 6
                                       (International)

Enclosures (2)



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