Foreign entity gets 120 days to elect partnership status

Plain-English summary

A foreign eligible entity intended to be classified as a partnership for U.S. federal tax purposes but inadvertently failed to file Form 8832 on time. The IRS concluded that the requirements for discretionary filing relief under Treasury Regulations sections 301.9100-1 and 301.9100-3 were satisfied. It gave the entity 120 days to file Form 8832 with the requested effective date. The entity and its owners must also file any required original or amended returns consistently with the relief, including applicable Forms 8865. If they do not meet that condition within the same 120-day period, the ruling becomes null and void.

Ruling snapshot

• Question: May the foreign eligible entity make a late election to be classified as a partnership?
• Outcome: Approved, with 120 days to file Form 8832 and consistent returns.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201923006                                              Third Party Communication: None
Release Date: 6/7/2019                                         Date of Communication: Not Applicable
Index Number: 9100.31-00
                                                               Person To Contact:
-------------------------                                      ------------------, ID No. ----------------
--------------------------                                     Telephone Number:
----------------------------------------------------           ----------------------
------------------------------------                           Refer Reply To:
------------                                                   CC:PSI:01
                                                               PLR-121035-18
                                                               Date:
                                                               February 06, 2019




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

Country = ------------

d1           = ----------------------



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

This letter responds to a letter dated July 2, 2018, and subsequent correspondence,
submitted on behalf of X, requesting a ruling under §§ 301.9100-1 and 301.9100-3 of
the Procedure and Administration Regulations that X be granted an extension of time to
file an election to be classified as a partnership under § 301.7701-3(c), effective d1.

                                                       Facts

X is an entity formed under the laws of Country. X is not classified as a corporation
under § 301.7701-2(b)(1), (3), (4), (5), (6), (7) or (8). X intended that it be treated as a
partnership for U.S. federal tax purposes effective d1. However, due to inadvertence, X
failed to file a timely Form 8832, Entity Classification Election.

                                              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
elect its classification for federal tax purposes as provided in § 301.7701-3.

Section 301.7701-3(b)(2)(i) provides that, unless it elects otherwise, a foreign eligible
entity is (A) a partnership if it has two or more members and at least one member does
PLR-121035-18                                  2

not have limited liability; (B) an association if all members have limited liability; or (C)
disregarded as an entity separate from its owner if it has a single owner that does not
have limited liability.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be classified
other than as provided in § 301.7701-3(b) by filing Form 8832 with the service center
designated on Form 8832.

Section 301.7701-3(c)(1)(iii) provides that an election made under § 301.7701-3(c)(1)(i)
will be effective on the date specified by the entity on Form 8832 or on the date filed, if
no date is specified on the election form. The effective date specified on Form 8832
cannot be more than 75 days prior to the date on which the election is filed and cannot
be more than 12 months after the date on which the election is filed.

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a
reasonable extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3,
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
subtitles E, G, H, and I. Section 301.9100-1(b) defines a regulatory election to include
an election whose due date is prescribed by a regulation published in the Federal
Register.

Section 301.9100-2 provides the rules governing automatic extensions of time for
making certain elections. Section 301.9100-3 sets forth the standards the
Commissioner will use to determine whether to grant an extension of time for regulatory
elections that do not meet the requirements of § 301.9100-2.

Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3 will be
granted when the taxpayer provides evidence (including affidavits described in
§301.9100-3(e)) to establish to the satisfaction of the Commissioner that (1) the
taxpayer acted reasonably and in good faith, and (2) granting relief will not prejudice the
interests of the Government.

                                         Conclusion

Based on the facts submitted and the representations made, we conclude that the
requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a result, X is
granted an extension of time of 120 days from the date of this letter to file Form 8832
with the appropriate service center to elect to be classified as a partnership for federal
tax purposes, effective d1. A copy of this letter should be attached to the Form 8832. A
copy is enclosed for that purpose.

This ruling is contingent on X and its owners filing, within 120 days from the date of this
letter, any required returns (including amended returns) consistent with the requested
PLR-121035-18                                 3

relief being effective on d1. To the extent appropriate, these returns or amended returns
must include, but are not limited to, Forms 8865, Information Return of U.S. Persons
With Respect to Certain Foreign Partnerships, such that these forms reflect the
consequences of the relief granted in this letter. If this condition is not met, then this
ruling is null and void. A copy of this letter should be attached to any such returns.

Except as expressly set forth above, we express or imply no opinion concerning the
federal tax consequences of the facts discussed above under any other provision of the
Code.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

In accordance with a power of attorney on file with this office, we are sending a copy of
this letter to X's authorized representative.


                                      Sincerely,



                                   By:Joy Spies
                                      Joy Spies
                                      Senior Technical Reviewer, Branch 1
                                      (Passthroughs and Special Industries)

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



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